Which financing to choose

[Mary Pastoral]

Hi BP community, which one would you advise to be the next move for financing of next investment property, given the following options: 

1. Get a business line of credit for a single family home owned under our LLC. Property is used as a short term rental. Fully paid. Current Zestimate of 209,000.

2. Refinance our first investment property. Owned under our names, bought in 4/2023 for 110,000 (placed 25% down; interest rate 6.625%)  ; current Zestimate of 123,000 (very low appreciation, but currently cash-flowing long-term rental). Currently rented until June 2025. ]

We have bought two more long-term rental properties in 2023/2024 but those were purchased February 2024 and July 2024 so plan on not touching those yet for refinance.

3. Refinance current primary home. Bought 9/2023 for 425,000 (VA loan with 0% down, interest rate 6.25%) ; current Zestimate 445,000.

Thank you. 

[Carlos Valencia]

Hi Mary, 

It seems its best to cash-out refi on your single family that is being used as an STR. Since its fully paid Cash-out Refi would be the better route to go than a line of credit like a HELOC. You will get a better rate when getting your money via a cash-out than heloc. By the way what market are you in all 3 of your properties seem pretty low in price allowing you to have positive cash flow.

@Albert Bui @Matthew Kwan