Cash out refinance or HELOC?

Question

Account Closed · Answer

Have you checked with any banks yet?  I tried to refi a flip I did recently and conventional financing said they would refi me 70% off the purchase price and rehab costs (rehab had to be an invoice from a contractor).  This number left me below the amount I borrowed.  This scenario would of been if I refinanced at 6 months.  If you wait for a 1 year of holding the property then I would of been able to refinance off the ARV value of the house.  Check with a bank and what their lending criteria is.

Heloc's in my opinion are awesome!  Cheap loans to purchase and acquire RE.  In your scenario I don't see how you would get a Heloc.  They normally will give you a loan based off the equity you have in your residence or investment property.  This will not allow you to pay your investor his principle back.

Look  into the refinancing and if you don't get the answer you want call another back until you get what you need.

Desiree'

Franklin Romine · Answer

Longterm hold I would cash out refinance.  Short term hold < 3 years I would secure a line of credit.  Real estate debt is like a basket of groceries.  You want a variety of loans....

Brent Coombs · Answer

@Josh Braun, in the meantime you should pay your friend back at the same Rate as their opportunity cost - or BETTER (ie. the same Return they would have got if they hadn't lent it to you - or better). Hopefully the deal you found will easily allow you to do that from its Rental per month? That way, what's their hurry? Cheers...