Cash Out Refi vs. Home Equity Line of Credit

[Kevin DeMaio]

What would my fellow BPers use to get started off on their first BRRRR. Using a primary residence, would you cash out refi or use a home equity line of credit and why? What would the personal pros and cons be for both options?

[John Warren]

@Kevin DeMaio i have used both. I did a cash out refinance AND a HELOC on my home in Riverside, IL when I went to buy my first deal. I personally prefer the HELOC as you don't pay interest on the money until you use it. In addition, it is interest only, so if you are in a tough spot it is not that hard to make the payments. The cash out refinance is something I do a lot on my pure investments. I have done conventional cash out refinances on my homes and my four unit, and I have also done commercial cash out refinances and even the Fannie Mae non recourse refinance (my favorite). You are putting permanent debt on with the cash out refinance, so you want to hold the property for a while to make it work.