Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Starting Out
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 4 years ago,

User Stats

6
Posts
2
Votes
Clint Carlisle
2
Votes |
6
Posts

Factoring cash out refi or HELOC into rental property

Clint Carlisle
Posted

I'm looking at two options for tapping into my primary home equity in order to make the down payment for 3-5 rental properties in the next year. I'm looking to make sure I correctly account for this additional debt servicing when shopping for rentals...also looking for opinions on which one of these options is better.

Here are the rundown on numbers:

Estimated home value: $400K

Remaining mortgage: $222K

Current loan: VA @4.5%

Option 1 - Streamline refinance to reduce the rate to 2.5%, bringing my payment down. Then take out a HELOC to fund the investments and factor the HELOC monthly repayment when determining cash flow on potential properties.

Option 2 - Cash out refi at 2.25% for 90% LTV ($360K). Use that to fund new investments. I'm not 100% sure how to properly factor this into my cash flow calculations. The total monthly payment on the loan would only be $100 higher than what I have prior to the cash out refi, but it would be ~$500 higher than what it would be with the streamlined refi + HELOC. I assume the latter is the best thing to use in order to make sure I'm truly cash flow positive here?

Anything I'm missing? I'm leaning towards a HELOC if I can find one with a higher LTV. 75-80% doesn't quite get me to where I want to go for 3-5 properties.

Thanks for the advice!

Loading replies...