Equity Line vs. ReFi for BRRRR strategy

5 Replies

Ok, this is most likely a simple question but I feel I'm putting too much thought into it and would like others thoughts and opinions.  What are the pros/cons with going with a equity line on a rental property vs a refi of the property.  I know that @Brandon Turner promotes refi the property.  I wonder if there are any folks using an equity line to buy their next buy and hold vs. refi. a previous property to pull cash out.  My first thoughts are that a equity line may avoid some bank fees that come along with mutliple refis.  However, I fear I'm overlooking something.

What are some of the variables that come into play....I'm looking at rates, bank fees, appraisal requirements.

As always, thanks for the comments.

Jason

Equity line is going to have a variable interest rate. It will also leave it up to you to pay principal down, as your monthly payment is usually minimum interest only. Equity line saves on closing costs but leaves you vulnerable to interest rate increases. 

My opinion: use equity line to have access to cash for when you are looking for/need a deal. Once you have a property locked up, use refi to get your cash back out. 

If you're looking at a heloc you certainly want to know how to effectively use one. Check out the P.I.L.L. method on youtube. You can also find a guy named Michael Lush on youtube and he calls the method, "replacing your mortgage".  For me, a heloc works best for the type of investing I'm involved in. Different methods are right or wrong for different people, for different reasons. Understanding this repayment method when dealing with heloc's has been a game changer for me!

Prayerfully this assists you throughout your journey.

Happy Investing...

Originally posted by @Ivory Hayes :

If you're looking at a heloc you certainly want to know how to effectively use one. Check out the P.I.L.L. method on youtube. You can also find a guy named Michael Lush on youtube and he calls the method, "replacing your mortgage".  For me, a heloc works best for the type of investing I'm involved in. Different methods are right or wrong for different people, for different reasons. Understanding this repayment method when dealing with heloc's has been a game changer for me!

Prayerfully this assists you throughout your journey.

Happy Investing...

 I'll look him up.  Thanks.

Careful with the Michael Lush character, he's another GURU who wants you to send him money to get access to his special list of "HELOC" mortgage bankers. I found this to be a bit of a joke. Better strategy IMHO is to use a traditional HELOC on a property you already own to get access to capital needed to purchase additional rehab ready investments. Do your rehab, then refi and pull your cash out, paying off the HELOC and pocketing the diff.

Originally posted by @Chris Gillins :

Careful with the Michael Lush character, he's another GURU who wants you to send him money to get access to his special list of "HELOC" mortgage bankers. I found this to be a bit of a joke. Better strategy IMHO is to use a traditional HELOC on a property you already own to get access to capital needed to purchase additional rehab ready investments. Do your rehab, then refi and pull your cash out, paying off the HELOC and pocketing the diff.

 Haha....yeah.  I figure this out pretty quick.  I'll pass on Michael Lush and thanks for the heads up.

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