Seeking Opinions: My Potential Rehab & Rental Plan Of Action

[Chris Sean]

Good evening. Seeking experienced opinions on the pros and cons of my investment strategy. My 1st property I plan to buy and rehab all cash then rent it. once that's done I plan to take out a home equity loan on the property and use the money to repeat the process. Thoughts? Thanks in advance.

[David McErlean]

Chris, 

If you can, refi the property with a fixed loan. Home equity lines rates usually fluctuate with prime interest rates. Many people are also caught off guard when the interest only time frame ends and the monthly payment increases by 2 or 3 times. With interest rates still at all time lows, and the fed threatening to raise interest rates, take advantage of locking in the low interest rates now. With a good 15 or 30 year loan, you can pay it off early, but your monthly payment won't increase on you. All the interest is also tax deductible.