Cash Out Refi or HELOC?

[Kaydn Jensen]

Hey BP, Thanks to BiggerPockets I have recently made my first purchase. It’s a duplex where according to my numbers I will be able to live for free if the home is on a regular 30 year mortgage. I already have a great renter and things are going well. Here’s my situation and where I hope I can get advice from some of the smarter and more experienced people than me on here. I was fortunate enough to be able to pay cash for the home and now I am looking to free my cash up to move on to another rental. Would you recommend taking out a HELOC or doing a Cash Out Refi on the property? My estimate is that I paid more or less 90 cents on the dollar for the property so I got a small discount on the property and have some additional equity there. I appreciate your advice In advance!

[Jeremy Taggart]

@Kaydn Jensen If you are using the cash for a down payment on another rental, then do the cash out refi. If you would be able to get enough on the HELOC to pay for purchase + repairs on another rental, which you would then refinance (BRRRR), then go with the HELOC. The main thing is not to use the HELOC for long term funds because you don't want to continue paying the interest on it if you can prevent it. Just use that for short term plays. Cash of refi if you are going to use the money for down payment on a long term rental.