HELOC vs DSCR for BRRR properties in Birmingham

Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
10mo
Neither, if you qualify for better loans.
If it is in your name, get a FNMA loan.
If it is in an LLC, find a bank loan.
1 Reply
Zachary Clevenger
Investor · Bargersville, IN · Member since 2017 · 95 posts · 52 votes
10mo
Hello Jane. Your choices really depend on the type of strategy and reasoning of needing the funds. Are you trying to pull cash out and roll into another one? I think determining your "why" is step #1. Several options and many strategies.
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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
10mo
The Heloc - is it on your personal residence, or a separate property, or will you attempt to get a new line of credit (loc) that is secured by your new investment property (which is not technically a heloc)? Also, what is the intended use of the funds that you take out of the property?
Lines of credit are meant to be used in the same fashion as credit cards - you borrow money for a short term use and then pay it back quickly. They are intended to provide liquidity. They are not meant for long term financing for real estate investments.
Mortgages and similar instruments are meant for permanent, long term financing for real estate properties. Lines of credit tend not to work well for long term financing needs and vice versa. The use of the funds should be the driver of your decision.
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Jake YuskaitisBusiness Member
Lender · New Jersey, USA · Member since 2022 · 254 posts · 67 votes
10mo
what's your goal with the HELOC or cash out?
[email protected]551-287-6884
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Andrew Zamboroski
Lender · Member since 2021 · 498 posts · 131 votes
10mo
Quote from @Jane Gold:

Would you recommend a HELOC or a DSCR loan for refinancing a rental property bought with cash?
Thank you

Often times what you're using the funds for can help dictate this for you. If it is a long term thing, a DSCR loan (out of the two given options) may make more sense. If it is a short term thing (rehab on another property, etc), a heloc may be a better fit.
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Randall LeBlancBusiness Member
Lender · Walnut Creek Ca · Member since 2021 · 10 posts · 2 votes
10mo
@Greg Scott FNMA will not let you cashout within 12m. The non-QM space which includes DSCR is more flexible and forgiving for BRRRs.
Randall LeBlanc - Cornerstone First Mortgage531 Reviews
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- Greg ScottPro Member
  Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
  10mo
  Quote from @Randall LeBlanc:
  
  @Greg Scott FNMA will not let you cashout within 12m. The non-QM space which includes DSCR is more flexible and forgiving for BRRRs.
  @Randall LeBlanc - She paid cash, so she could do delayed financing within the first 6 months.
  1 Reply
Hunter TerrynPro Member
Birmingham, AL · Member since 2021 · 79 posts · 68 votes
9mo
Would love to know some great DSCR lenders. Lots of my clients need it
[email protected]205-546-2231
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- Deon Burks
  Investor · Long Beach, CA · Member since 2025 · 6 posts · 1 vote
  9mo
  Quote from @Hunter Terryn:
  
  Would love to know some great DSCR lenders. Lots of my clients need it
  
  Convoy Home Loans has some pretty competitive rates for DSCR loans and also offers a DSCR 2nd position and even a no-seasoning period. Let me know if you'd like to connect!
  0 Reply
Matthew Bernal
Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
9mo
Hi @Jane Gold I work with multiple lenders and would be happy to help. Do you have a deal scenario you can share?
0 Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 523 votes
9mo
Generally a DSCR loan if you are looking at those two options. it will depend on how long you plan to hold on to the property. DSCR loans are used as longer term financing. If you have the right debt to income / DTI ratios, conventional loans can work depending on the borrower and property details.
[email protected]818-770-0340
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