Mortgage or HELOC on all cash deal?

2 Replies

I have an interesting question i'd like to get some opinions on. I just built a duplex out of pocket (all cash) and am going to move into one side and rent out the other. I want to take the cash back out. Which would be better, a HELOC or a traditional mortgage on the property? Funds will be used to keep building new construction

@Wade Stahle anytime I talk about this subject I based it on what you are planning on doing with the next property you are going to acquire. Meaning, if you are flipping that house, then get a HELOC. You an reuse your heloc over and over again by just paying it back with the proceeds. HELOCs have lower closing costs than mortgages do. However, if you are planning on buying and holding your next property then you need a stable payment that won't change - and that's when a permanent mortgage would come into play. HELOCs carry a variable interest rate, and after 10 years they "mature" into a different loan product. If we are flipping, we need money fast and cheap. If we are holding properties we need money that won't change our cash flow. Hope this helps!

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