Refinance? Heloc? Own Free and Clear?

[Mitchell Kearney]

This is my first post here on Bigger Pockets. I’m hoping for some advice since this is where smartest real estate professionals hang out!

Background: I bought my first property eight years ago and have paid the loan down to $38,000. I also own three other properties and this has been my highest performing property. My monthly payment is less than $500 per month. It’s worth about $170,000 conservatively as far as equity is concerned.

Goals: I want to gather high performing properties as rentals in order to have enough passive income to quit my day job and pursue real estate full time (as a BRRR specialist). I also want to start a property management company that watches over my properties, as well as takes on new clients.

THE QUESTION: What is my best option to tap into the equity of my first property?

My first thought was to get a HELOC. I can tap into the equity, while keeping my monthly payment low (I should have finally balanced my debt to income ratio to make this possible). But, I'll have to deal with interest and if this virus causes a recession, and they pull lines of credit, I have no funds. If I refinance, the monthly payment will go through the roof, but I'll have complete access to the equity with no interest. Therefore turning my highest performing property into my least performing. But, if a recession hits, I'll have refinanced at the peak of the market, and have full access to the equity. I could also pay off the mortgage in about 5 years to make the property even more profitable and make obtaining properties in the future easier.

What would you do? I look forward to hearing from all you smarty pants!