So I'm in a bit of a pickle, I own my house out right and recently moved an hour away for work. I want to rent it out for cash flow and should have it up and filled by the end of June. But while looking into loan options for a second rental, I've hit a road block. The house is valued at 35k, mainly due to small town economics. But I can't get an answer on using home equity vs a cash out refinance loan to use the equity as a 20% downpayment for a loan. My understanding from one lender's associate, is that I should use a cash refinance loan. But there is no existing loan to refinance, so with the house no longer being my primary residence that goes against me for a home equity loan, and no loan on the house goes against cash out refinance if I'm reading everything right. Plus most lenders want a house value of 50k minimum, from what I've come across thus far. However I only need 27k max to cover my closing costs and 20% down for most of the rental investments I've come across in the city......so what does one do with this dilemma? Sorry if this is confusing at all, the investment group I'm working in conjunction with is perplexed by this issue as well.