Need Advice on next step

[Tiana Engstrom]

Hello All,

We have a unique situation and I would like to get your opinions. We decided last year to move out of California and decided to move to Indiana so we went on the hunt and purchase an off market deal that was being sold under value. Since we could not move till this year we rented it out on a year lease. Now our plan is to keep our house in California as a rental. Our house in California has a loan on it for $220k but is worth about $600k and since we are still owner occupying it we are thinking of pulling out a HELOC on it so that we can use the money to purchase a couple for rental properties once we get back to Indiana or just have it available for any major future problems. We still have our jobs and look good on paper as borrowers but when we move back to Indiana we will be looking for work.

My question is the HELOC a good idea or should we do a cash out refi. or do you recommend something else.

[Tiana Engstrom]

Thank you @Eric Carr, @David Kramer, @Mike Roy and @Ross Denman for your responses.

I like the HELOC for the fact that its there when and if I need it and it will give me negotiating power by making cash offers. We really don't want to sell the CA property just yet because I think we eventually will but probably after we have more experience and can put the proceeds to better use. Our goal is to have 5 cash flowing rental properties by next year so we are not trying to scale quickly but more a slow and steady pace. We don't plan to use more than a third of our HELOC at any one time so our payments should never be outrageous and then we can refinance the property to pay back the HELOC.