Cash Out Refi or HELOC

[Aaron W.]

Own rental properties outright and am looking to add to our portfolio. Would you do a cash-out refi or a HELOC to finance our future property purchases? Why?

[Richard Queen]

I recently faced the same question with a couple properties I own free and clear. I decided in favor of the HELOC because it gives me more flexibility where I'm only paying for what I use. I didn't want to do a cash out refi and then let the cash sit while I found deals. With a HELOC, I can have the flexibility to make cash offers on anything I find and then refi back into the new property and pay of the HELOC, keeping it open for future deals. I can keep the HELOC open as revolving cash credit and use it for several years. There are benefits to both methods. Awesome job in getting free and clear properties - I think that's the win here. Cash out vs HELOC - both are going to use your equity to get more properties = success! :)