New Mortgage vs HELOC for cashing out equity

[JJ Neerman]

I have two properties in the Tulsa area of Oklahoma I bought in August; both were land and mobile home purchases. One I paid cash for, the other I put money down and the owner carried back the balance. The twist on the owner carry is that the deed does not show a mortgage lien held by the seller.

So, I want to BRRRR these. Are there options to either get a first mortgage for each (or one for both), or get a HELOC for one or both? I know having mobile homes presents more challenges for financing options.

The purpose for cashing out is obviously to payoff the owner and go find a multi family to then also BRRRR.

Thanks in advance for any support, guidance and/or suggestions.

[Mike McCarthy]

I can’t speak to the MH side of it, but basically:

A HELOC is great because as a line of credit you're only paying interest for the money you're using right now. Flip a house, sell it, pay back the HELOC and you're no longer paying interest until the next time you need money. The downside is that rates are a bit higher and are variable... so if they go up in 1-5-10 years, you're going to have to pay more.

A mortgage is great nowadays especially since rates are very low. Lock in a 4/5% rate for 30 years and you’re golden. The chance of rates being this low in 5-10 years is slim.

Both vehicles are great, it’s just what makes the most sense for your plans!