Refinance after paying all cash...lender said it's not possible!

[Miles Stanley]

So I was talking to my credit union and I explained that I paid all cash for a 2nd/rental house and that after I finished fixing it up, I wanted to do a cash out refinance to get my capital back out. They said they'd be happy to do it, but they said plainly that since there is no existing mortgage, I cannot do a refinance bc there is nothing to refinance! "Fair point" I thought. They said instead that I would have to do a home equity loan...and this applied whether I lived there or rented it out. To top it off, I can only have 1 home equity loan product at a time, so it seems I cannot do more than one deal of my BRRRR strategy at a time either.

Has anyone else run into this?  I don't ind doing a HEL, but i also want to keep blowing and going.

Thoughts?

Thanks,