BRRRR Refinance vs. HELOC

[James Baker]

Hello BP nation. Question for those with experience and or knowledge in the process of BRRRR. This might be a crazy question but is there a reason why people do not use a HELOC vs. a refinance during the BRRRR process? I understand the differences between the two. The one big difference that I see between the two is that a refi could cost up to 5k or more in closing cost. Where as a HELOC you would pay a much lower amount to ba able to pull money out of a deal. Any insight would be greatly appreciated.

Thank you 

James Baker

[Corby Goade]

@James Baker- it's really the same process, but the way it should work is in reverse of what you've described. You use the HELOC to purchase with cash- giving you the leverage to close quickly and eliminate bank required contingencies where you are comfortable. You fix it up, place tenants and wait the seasoning period and THEN you do the cash out refi. You'll still be paying the same closing costs, but you've created leverage where there was none. Now you have your HELOC paid off and a locked interest rate on your investment and you start all over.