Lots of equity, Heloc or Cashout?

[Christopher Abernathy]

Hello!

I am new on here but have an item I would like to get some advice on. I am a general contractor in NW Montana and am looking to start moving into real estate investment, which is why i'm here..... obviously. We are currently living in a home that I built for us that appraises at around the 400k mark. We owe 120k on it, see where I'm going with this. Right now I have private financing that is interest only @ 8.25% and balloons at 3 years. We have 2 years left on this option. My dilemma is weather we should go with a cashout-refi when we drop the private money or if we should get a mortgage for what we owe and pull a second in the form of a HELOC on the property. I like the idea of a fixed interest rate in the cashout, but its nice to know that we are only going to pay what we need on the HELOC. If we are able to pull a full 80/20 loan to value cashout on the house that gives us about 200k worth of liquid that we can use to start dumping into rentals. Not sure if we can get those same numbers out of a HELOC. I have filed an extension on my taxes from 2017 so that I can make sure that I get the numbers right so that I claim the right amount in order to get the money that we need. Can you claim less and get the same amount for a HELOC that you can for a cashout and get around paying the self employment taxes. I am ready to make a move in the next 1-2 months, just want to get some more knowledge in. Any advice would be nice? Lots of little wrinkles in this one from my point of view. I'm sure that for some of you guys this is an old hat, you are the ones I would love to talk about this stuff with.

  Also, another thing i'm considering is using the money for spec housing since I can cram tons of equity into the project with my company doing the bulk of the work.  Rent it or sell it? That's for another post though.  THANKS!!

    -Toast Abernathy