HELOC vs Refi, which to choose to start investing

[Antoinette Munroe]

My primary residence has 200k+ of equity(due to significant rehab and market growth). We've decided to move to another home, keep this as a rental and plan to aggressively invest in RE via BRRRR strategy. Trying to decide if I should use a HELOC or REFI from 15 to 30yr and have my cash up front(keeping monthly payment the same). We currently airbnb 1 of the units so the house already pays for itself. Moving would generate additional income from the second unit.

[Derek Diamond]

@Antoinette Munroe

Hey Antoinette!  I personally like both strategies depending on what you are trying to do.  They both can work great.  I have personally used both.  I will just briefly describe how I used both:

Refinance- I did this because I had equity in a duplex that was on a 15 year loan.  I refinanced into a 30year and pulled out enough money to use as a down payment for my next. I did not have anywhere near what you have.  Moving it into a 30 year allowed me to keep my monthly payment the same and still have access to the money. Win!  My plan was to hold both investments for the long term so I wanted to lock in the lowest payment I could with a fixed rate.

HELOC- I used this strategy when my plan was to use the money more like a credit card than the previous strategy I described. I pulled the money out and bought a place then fixed it up and refinanced into longer term financing. At which time I paid back the HELOC (so I was not paying the interest). I then found another place and I hope to keep going with this strategy. Down side- I pay a variable rate that is higher than a refinance rate. Positive- I only have interest payments so my monthly payments are low so I have good cashflow.

Good luck! I am sure you will find success with either option.