Help with HELOC decision

[Jake Tiffany]

I'm planning on buying 3-4 houses this year and brrrring them. I have one rental property already and $50k cash. I should be able to get about $130-145k by taking a HELOC on my personal home and the rental, along with the cash. I've narrowed it down to two banks, below are the two scenarios. I'm curious which decision the community would choose and why.

Bank 1. My rental mortgage is with this bank. I owe $48k at 5.5%. They will give me $87k at 7.5% HELOC for my primary and rental equity. They will give my 75% LTV. With my cash, in total I'll have $135k.

The rental cash flows $190 per month after MTG, vacancy, repairs, CapEx and taxes.

Bank 2. I will have to use my cash to pay off the rental property for them to give me a HELOC on it. They are giving me 80% LTV so the total I'll have access to is $145k from the now paid off rental and my primary residence.

With the rental paid off it will cash flow $690 per month.

I’m leaning in one direction but since I’m new to all this I’d appreciate any feedback and opinions from more experienced minds. Thanks in advance everyone.

[Chris Davidson]

@Jake Tiffany I lean towards Bank 2. Having one "paid off" property and using it as your bank allows you to pay down the note quickly. Also if you don't find a deal right away you aren't paying interest on money you aren't using yet. There is a little less time pressure. However if you are one to over analyze and slow to take action you might need a bit more of a push. 

Ask your banker about seasoning. I have heard rumors some loan are going to require 12 month seasoning starting this spring. While this may not be a problem it is better to know and have a plan for it. Best of luck!