HELOC vs. Refinance For A Live-In Renovation

[Ashley Petersen]

QUESTION: When does it make sense to do a HELOC vs refinance your house?

SITUATION: I have a home that I’ve been doing a live-in renovation with. When it’s all said and done, I’ll have invested about $50,000 (plus about $10,000 in closing costs at purchase). I’m not counting any carrying costs since I’m living here. 

Conservatively, I have about $180,000 in equity. 

I plan to use this home as a long-term rental when I’m ready to move out. My expenses (not including capex or vacancy) are $1,900/mo. The house could rent for $3,500 in my area. 

But once I get tenants I want to use the $60k left in the house to buy another property that will immediately be used as a rental. 

When does it makes sense to do a HELOC vs refinance the house? Does it just boil down to how much I'd pay in monthly interest on a HELOC vs a refinance, or are there other things I should consider?

Thanks in advance!