Own 2 homes free and clear wanting to scale.

[Byron Paille]

I currently own 2 homes free and clear. One older I bought at an auction  and a new build. I have a large lot and approval to build a duplex. I am done spending my money and am looking to scale. 

Do yall do a refi for this or get a heloc? With rates at this level I an not sure places will cash flow at 80% loan value. 

One home is worth 125k and new build is hitting the 230-250k mark.

[Jason Wray]

Byron,

My advice is go the Cash out refinance route for a few reasons. One - Heloc rates are very high right now in most cases 9.50 to 12% and are usually over 10-15 years. A cash out refinance is set up on a 30 year mortgage so it offers a lower payment and rate. A Heloc is a debt burden and add an extra tradeline to your credit which can cause higher DTI and excessive trade lines can drop scores.

A heloc can "Never" be used as an "Asset" or for PITI reserves when buying another property which is required. Cash out refinance puts the cash into your hands and money is power and it can be kept in a savings or another interest earning account to offset the mortgage rate. Helocs are also much harder to get on an investment property versus a COR.

If you ever have any question feel free to reach out I am always happy to talk REI!