First flip - cash out refi or HELOC?

[Brittney Horseman]

Hello! My goal is to purchase my first flip investment property by the end of the year. I have about $100K equity in my home and I want to use that to finance the property and reno. Given that I want to flip, what is my best financing option between a cash out refinance and a HELOC? Thank you!

[Brandon Rush]

Hey Brittney,

If you are looking to flip, I would recommend the HELOC. It allows you to have "cash" on hand and not increasing your monthly mortgage payment which a cash out refinance would. If you were looking to purchase an investment property, then I would recommend the cash out refinance.

Also, if you do a cash out refinance and do not find a deal for an extended period of time, that is a lot of cash sitting around and losing value. With it sitting in a HELOC, if anything, you can increase your HELOC in a few years after additional appreciation.

Good luck!