Home Equity Line vs Cash out Refi: Which is better to fund my next deal?

[Mike Barry]

Hi all,

Newbie on the forum here and to investing. I currently have two rental properties, and am looking to acquire funds for my third. I am looking at either a Home Equity Line of Credit on my first SFM rental or a Cash out Refi. It has been extremely difficult to find a bank willing to lend a home equity line on an investment property, but I did find one who will lend up to 75% loan to value. I've also fund several cash out refinance options who also will only lend up to 75% loan to value. 

The advantage I see with a cash out refinance is I will also have the ability to lower my interest rate by about 1.25% however the cash to close is much much higher than if I went with a HELOC. (5k vs about $850 appraisal/origination fee).

Does anybody here have any experience using either of these two options for funding? Are there any advantages/disadvantages I should be taking into consideration? Prefer one over the other?

Thanks all for your help. I'm looking forward to using BP as a great networking tool!

[Mike Barry]

Very true well said!

Another factor I'm trying to consider is which will help/hurt my debt to income ratio for continuing to invest down the road. From what it sounds like a HELOC will show as a $200 debt per month vs a cash out refi which will actually lower my payment...