HELOC or Cash Out REFI

[Justin Harley]

I am new to real estate investing.  I’ve been listening to biggerpockets podcast, and reading books for a while now.  At this point, I’m just ready to take the plunge and start creating passive income.  I have approx 240-250K in equity in my home.  What would be the best option for the take and do I really need to take out all the equity or a portion?   

Next question, would I be an idiot to buy long distance (2 hours) from my home town or would I be better off starting out local?  

Thanks for the input guys.  Looking forward to reading the replies.

[Kerry Baird]

My preference in my situation is to have long term non adjustable financing on my own house. I don't want the surprise of an adjustable HELOC biting me later. There is a place for these loans, but there must be a plan in place to pay it off in the short term. They affect DTI as well, if they are fully used up, which can pinch later when you expect to refinance out.

In my early days, I bought a condo in Glendale, and we lived in Tucson.  We had to drive a couple hours to work on that property, and it was such a pain.  We didn't have enough money to hire out tasks, so what should have been done in short order dragged on a few months, and each month costs a mortgage payment.  You don't know what you don't know at first, like how much time or money it takes to do some minor or major renovations.  I also didn't have a team in the other location, where I did have contacts and handymen in the local environment. 

Long and short, after the first rental or two in the local area, then I had the experience to go farther away.  We bought turnkey propertie in Texas, when we were stationed with the Air Force over in England.  Grow into it.