HELOC, Home Equity Loan, or Fannie M Homestyle for Rehab

[Shirley McLean]

If you have a property that is paid for free and clear but needs maybe $20k in work to get it into rentable condition plus you want money to rehab a second property (maybe $35k in rehab costs) that you need a loan on, should you do a HELOC or Home Equity Loan to finance the two rehabs? Would you be better off on the second property to get a Fannie Mae homestyle loan which includes the mortgage loan plus renovation money? What's the best course of action once both home values increase after repairs.

Example 1: $90k home paid in full, needs $20k in repairs, ARV=$150k

Example 2: $70k fixer needs $35k in rehab costs. $105k loan needed with ARV=$155k