Refi vs. HELOC?

[Neil Beeharry]

Hi all,

i recently purchased two single family homes (adjacent properties) in Lansford, PA. 

the same seller owned both properties he was looking to off-load asap so i made a cash-offer and purchased both units for $15,000. 

i purchased so i could up-date and rent them out. 

the one unit need only cosmetic work and was done by myself/family- i spent $5,000 on up-dating and is now being rented out for $500 per month. 

The other unit is a complete gut-job and I expect to pay in the region of $15-20k to get this unit in a suitable condition. i am looking to get completed by early summer so it too can be rented out.

once these units are up and running, i am looking to continue the process - purchasing foreclosure/distressed properties, up-dating/rehabbing and then renting them out. 

i am looking to apply this method in the lower end of the market scale, where the total project will not exceed $30k - thus my question is whether to Refi the 1st rental unit or obtain a HELOC on it?

i am only looking to add a unit a year. so i could draw from the HELOC when a suitable property is found. i would use all the cash-flow to pay down the HELOC.

i look forward to your advice.

thanks in advance, 

Neil

[JD Martin]

Refi for sure. Rates are super low and you don't really want to float a variable on an investment property - there's really nowhere for rates to go but up.