Looking to buy my second investment property

[Brandon Wallace]

So over 2 years ago I bought my first investment property. It's an upper/lower duplex that me and my fiancé live in while renting out the upper unit. We are looking at getting another investment property. We don't have much cash on hand to buy and fix up our next property. We've looked into the refi or HELOC paths. We don't want to do a cash out refi due to having a 2.5 interest rate. So we were leaning more towards a HELOC. Is this a smart move? Why or why not? The property we want has been vacant for 2+ years now and it's 4 houses down from us. I Would offer the owner no more than $85,000 and probably needs $30,000-$50,000 worth of work. I Can probably rent it for $1,200-$1,300 when it's all done.

[Ash Hegde]

A HELOC can work for this, but keep in mind it has a variable rate, so it isn't the best product for keeping a balance long term.

If you have a lot of equity, sometimes a cash out refi will have a better rate than the blended rate of original mortgage plus HELOC. That may not be the case here since you've only owned your property for two years.

The target investment property looks like it will cash flow nicely! 

[Brandon Wallace]

Quote from @Ash Hegde:

A HELOC can work for this, but keep in mind it has a variable rate, so it isn't the best product for keeping a balance long term.

If you have a lot of equity, sometimes a cash out refi will have a better rate than the blended rate of original mortgage plus HELOC. That may not be the case here since you've only owned your property for two years.

The target investment property looks like it will cash flow nicely! 

Does it make a difference for a cash out refi that I spent about $30,000 fixing up my current place. Basically changing the entire inside making it a much nicer living space. 

[Ash Hegde]

The rehab on your primary will help with the cash out refi, there will be a new appraisal which should reflect the higher market value.