Taking out HELOC against my first rental property

[Dan Mann]

My name is Dan and I am closing on my first unit at the end of this month. It is a two unit with two long term tenants for $40,000 (I think this will appraise for $55,000-$60,000).

I am excited to get this rolling into another property and take a HELOC out on it as I paid cash for it.

Is it a good idea to take $35-$40k HELOC our against this property and use it as 20% down on another property if the cash on cash % makes sense? Or should I sit and hold a little while longer.

Thanks!

[Jonathan Bombaci]

@Dan Mann It might be better just to refinance it. You'll typically get better rates and terms with a refinance than you would with a HELOC but talk to some banks and see.

They’ll typically give you 75-80% of the appraised value for the loan and then you can use that for your next downpayment. HELOCs are s great way to tap into equity when refinancing isn’t ideal but given the current financial market I think a refinance would be easier and a better way to tap back into that money.

It sounds like you have a good thing going, Goodluck!