HELOC vs Construction Loan to finance rehab.

[Mimi J.]

Hi everyone, I am fairly new to bigger pockets and most definitely a novice with REI. I have been so engrossed with this website and the wealth of knowledge that is freely shared. I happened to stumble across this site when searching for builders risk insurance and have been so addicted. What I didn't think was possible regarding REI is possible and even more...opportunities are not limited. It's a matter of knowing. I've read, and read, listened to a number of podcast and am affirmed each time.

In any case, I own a property free and clear with my aunt. This has been her only home and is in dire need of major renovations and I have decided to gut. Given its prime location and ability to make a 2 BR basement rental unit...this is a win win. I have met with contractors, architect and found a lender for construction loan. I was of the understanding that you could not take out a HELOC if it wasn't your primary residence. I went to the bank today for another transaction and posed the question after reading a number of post. I was informed that I could take out a HELOC and it not be my primary resident.

With the construction loan, funds are closely monitored and before a draw is released it must pass inspection and would protect me. I selected a general contractor and am very impressed with the jobs he has completed. He works with a local investor who flips properties in the DC area. My only concern with him is that he is slow to respond phone calls and I had to put my foot down. Would you advise I take out the HELOC or construction loan? I am aware that the construction loan would later be refinanced.

Thank you!