Would a HELOC be the best way to finance my next deal?

[Kyle Ezell]

Currently, I have a property worth around 180k that was paid for in cash and I have yet to refinance the property. I also have a condo that has a conventional mortgage that is cashflow positive. Since I have all of this equity in the first property I was wondering how I should finance the next property. The two options that I currently see as viable are getting a conventional mortgage or get a HELOC. I am leaning towards the HELOC because this would give me the opportunity to purchase homes with the HELOC and renovate them before mortgaging them in order to pay off the HELOC. So my question is, is my thinking right with the HELOC as the best option for me or is there another more creative way to finance a deal that I am not thinking of?

[Patrick M.]

I got both of my first two units off the ground using a HELOC for part of the down payments. I did research and found that my local credit union had incredible rates and super-low transaction costs. Here's a pro-tip: with the recent rate cut, if your current property would benefit from a refinance for the primary mortgage, do that FIRST, then do the HELOC immediately after you're done with the refi. Why? You get to use the same appraisal TWICE, further reducing the cost to obtain the HELOC. If you've already got a low primary mortgage rate and refinancing wouldn't help, the HELOC is still a great idea.