[USER]

I am wondering if anyone had a similar situation. We have a rental property and are looking to acquire another using the equity in our current rental, which is around $90,000.

We are contemplating a HELOC or cash-out refinance for the down payment.

Can anyone share their experience with a similar scenario?

[Kacee]

I wouldn’t over leverage yourself by tapping on the equity in your properties.

This is how a lot of people get in triple building a house of cards.

Save for the down payment so that you have some stake in each property.

[Bennett]

I wouldn’t refinance. I have a couple open helocs on rental properties with equity, and some local banks in my town will offer intro rates, like 2.99% for the first year.

You also pay no substantial closing costs or restart your amortization period on your first rental.

The HELOCs wwe get, we make sure to buy a rental, add value, and refinance within a year to pull the original invested capital back out, and do it again.

It’s also more efficient.

[Scott]

You’ll most likely be in a significant negative cash flow situation that most likely will be more than any appreciation.

I would save a down payment and wait for borrowing costs to get down to 5%

[Palak]

Hi there! I’m a loan originator. I’d suggest a HELOC. With a cash out refi, you’d be refinancing the entire mortgage at today’s rates (which aren’t low) whereas a HELOC is like a revolving line of credit.

You have a draw period, typically of 3-5 years, where you take out as much as you need and you pay interest only on the funds drawn within the draw period.

After the draw period, you pay principal+interest.

It can be a fixed rate or an ARM. Fell free to DM if you’d like to discuss more.

[Author]

Posts