Cash out Refi or open HELOC?

1 Reply

Hello BP, I have an investment property at about ~55% Equity position (value ~$165k, 89k loan balance) that I want to either cash out refinance or take out a HELOC. My goal is to pay off a small loan used to buy this investment property (BRRRR style) and use the rest of the funds as a down payment for the next property. Whats the best option here to continue growing while paying off all debts other than the new debt the refi would incur? Cash out refi or HELOC? I do not have the next property lined up yet or UC so I have the time if one strategy is better than another, never used a HELOC before so not as familiar with the vehicle, but I know the closing costs on the refi will be significantly higher than the HELOC.

Originally posted by @Daniel Kern :

Hello BP, I have an investment property at about ~55% Equity position (value ~$165k, 89k loan balance) that I want to either cash out refinance or take out a HELOC. My goal is to pay off a small loan used to buy this investment property (BRRRR style) and use the rest of the funds as a down payment for the next property. Whats the best option here to continue growing while paying off all debts other than the new debt the refi would incur? Cash out refi or HELOC? I do not have the next property lined up yet or UC so I have the time if one strategy is better than another, never used a HELOC before so not as familiar with the vehicle, but I know the closing costs on the refi will be significantly higher than the HELOC.

Hey Daniel

It may not be enough to cash out. You're at 55% and many of the larger banks will not go past 60% on an investment property. Maybe a local bank will go higher on either a HELOC or a refinance; I don't think so though.

If you can, take the HELOC because you only pay for the money you use.

Best of luck

Stephanie