Using equity to make another purchase

[Felicia Lucco]

We have accrued decent equity in our home in NJ and maybe a bit in the rental prop purchased in FL earlier this year. Our plan is to use this equity to purchase another property. How do I access this equity? Refinancing could mean thousands in closing costs while a HELOC would be another loan to pay on in addition to a mortgage.

[Corby Goade]

Quote from @Felicia Lucco:

We have accrued decent equity in our home in NJ and maybe a bit in the rental prop purchased in FL earlier this year. Our plan is to use this equity to purchase another property. How do I access this equity? Refinancing could mean thousands in closing costs while a HELOC would be another loan to pay on in addition to a mortgage.

 Congrats on building up some equity, that's a great start!

The way you posed the question seems as if you are looking for an option where there's no expense and no risk in tapping in to that equity. I know in reality that's not what you are expecting, but you need to acknowledge that no matter how you invest, there will be risks and no one is going to lend you money for free. 

In 90% of cases, a HELOC is the cheapest and easiest way to tap in to that equity. If you plan to BRRRR your next investment, the HELOC is 100% the way to go. I could list a million reasons why, but for starters- most HELOCs are free to close, they don't cost a penny until you draw on them and once you pay the balance, the payment goes away forever. In addition, a cash out refi puts undue stress on you to make a move quickly, which can cloud your judgement.

Best of luck!