Best way to get money out of rental?

[Vandale Gentry]

Hi guys, 
I have a property that I previously lived in for many years prior to getting married and buying a bigger home and turning the other into a rental. We have had the rental for a while and now I am ready to purchase another rental home but am having a hard time deciding on the best financing method. I found a property for $150K that I would like to buy. I have $14K in a savings account, I have an income of about $460 a month from my current rental (after paying mortgage and taxes, etc.). I thought about a HELOC for the down payment, but the banks that I have talked to will only allow me to do 65% of value for a HELOC on a rental property. I thought about refinancing (the 3rd "R" in BRRRR) but the rates are higher than what I currently have. Currently, the rental property is worth $285K and has a mortgage of $175K, with a rate of 4.25% and the payment is $1,025. What is the best way to get enough money out of my rental for the down payment?

[Justin Beides]

@Vandale Gentry if you don't have one currently, have you considered using an FHA loan? More specifically a 203K loan? The 3.5% down payment total you would put on the house, so long as you live in it AND this is including coverage of a certain amount of rehab costs that can save you big money. If utilized correctly, this could definitely offset the increased interest rate that would come from refinancing your current living situation/future rental to fund your next deal. You can also consider partnering with another investor, or finding a private money lender to help you acquire the funds necessary to purchase this new property should you not want to refinance your current living property. There are plenty of ways you can go about it, you just have to get creative! Going back to the 203k loan, there are definitely pros and cons, but if utilized correctly the 203k loan can be extremely useful as an investment tool and definitely something worth looking into. Definitely do some further research and due diligence on it though before diving headfirst into it. If you'd like/haven't already, I recommend checking out Brandon Turner's book, No and Low Money down to get some good and creative ideas on utilizing cash flow wisely to expand your portfolio with minimal cash used. @Jerry Padilla already said this, but at the end of the day, an increased interest rate on a property can be offset by a property that will be generating more passive income to you and expanding your portfolio that, at the end of the day, will work to increase your net worth overall (so long as the numbers in your new deal work to your benefit and specifications of course.) The choice is yours on how you wish to go about it, I hope that whatever you decide works in your favor.