Do I leverage equity from my property?

[Neil Tollner]

Hi Everyone,

Recently joined, love everything about BiggerPockets and here to absorb as much knowledge as I can.

I have a 1 bed 1 bath condo 5 minutes outside of Boston with my fiance and have 130k in equity in the property. We need more space and I'm all in on renting it out and either house hacking a duplex, or buying a single family and save/learn how to manage a rental with the condo. The condo is on the beach and I know I can rent it in a heartbeat, since it's on a T line that goes directly into the city.
 
With that said, would you recommend a HELOC on the 130k equity for the duplex/single family? With rates so low, I think it makes sense. However, want to see if anyone would recommend against it. I could use personal money (and not opt for HELOC) for the next property, it would just make things tighter than I'd like.

If we go the house hack route, I know we'd go FHA 3.5% down route.. if we buy a single family to live in, we'd put 20% down.

Any insight and/or past experiences would be greatly appreciated! Thank you!

[Bonnie Low]

Have you considered doing a cash out refi? If you haven't refinanced lately you may be able to substantially lower your interest rate and walk away with cash to use without raising your mortgage payment too much, which would allow the property to still cash flow if you decide to rent it out. While you get the cash with a HELOC, you're probably going to pay a higher interest rate than a primary mortgage today. I'd run several different scenarios - sale, cash out refi, HELOC and compare the outcomes. You can use the BP BRRRR calculator to figure out the cash out refi numbers. Just enter $0 as the repair costs.