Advice please--cash out or line of credit?

[Maureen Rhodin]

I was fortunate to have a mom that made me invest in real estate in my 20s. I now have 2 properties that are debt free (15 year mortgages). I'm finally educating myself on these investments and find myself qualified for a commercial mortgage for about $400,000. I'm planning on purchasing another multifamily, but I haven't found it yet. I need about $60,000 for current repairs. Do I cash out the $400,000 at 3.8% or get a line of credit at 5%?. The cash will cost me until I find my next investment, which could take a year or more. I'm more comfortable paying a bit more to use the money when I need it. Having that amount of cash sitting in the bank is also asking for trouble...Would appreciate your wisdom--thanks!

[Matthew Irish-Jones]

You can’t take a HELOC on an investment property. If you are taking a HELOC on your personal home it won’t cost you anything until you use it, it’s like a credit card.

Most investors will refinance up to 80% of the LTV on an investment property as long as the mortgage is still covered by the rent.

[Patrick Smith]

@Matthew Irish-Jones  I didn't know you couldn't take a heloc on an investment property, especially one that has no mortgage or lien on it.  Why is that?  The bank would have a lien on the property so why do they care?  

@Maureen Rhodin Since you are debt free, refinance loans should be very low since the new loan will be in first place. 

[Matthew Irish-Jones]

Patrick Smith most lenders will not loan a HELOC on an investment property. There may be some local portfolio lenders that will consider it but generally the answer is no.
From the banks point of view there is more risk

[Maureen Rhodin]

To clarify, it's not a HELOC, it's a line of credit

I think I've determined my best route is to take the cash out as the lower interest rate will be to my benefit even though I may lose some cash now. 5-10 years should be plenty of time to get that next property in line.

Thanks for the replies! Much appreciated