Pay cash for a rental using HELOC or traditional mortgage?

[Stepheni Larson]

Hi BP, my primary is fully paid of, I’m looking to buy a rental property that cash flows. Should I use HELOC to pay cash for the rental property or should I use traditional morgage?

[Mike Dorneman]

@Stepheni Larson depends on what your goals here are. Also depends if you want to cash out your purchase + rehab cash. If you mortgage it, you’re looking at the down payment and rehab costs. If you use the echo sting HELOC to find the purchase and rehab, you can then Refi the house once rented and (assuming you selected a property with room for forced appreciation) get all your cash back out (up to 80%) LTV. The later is the BRRRR strategy. It works great a and it’s exactly how I find each and everyone one of my deals. I like having the cash on hand because you never know when a great deal is going to come up and you need that cash immediately.