HELOC or Cash Out Refi

[Joaquin M Dugan Jr]

Following a BRRRR project, is it better in your opinion to cash out refi or take out a HELOC and why?

[Jon Crosby]

Depends on the ARV of the finished project I think. If the ARV has created a ton of equity then you can simply use the HELOC as a revolving line of credit for your next BRRRR project(s), sort of like your personal down payment bank for all your future projects.

In general though I believe the point of the BRRRR strategy is to sort of 'reset' the home on a 30/15 year mortgage schedule so that it pays for itself until finally paid off at the same time pulling out any money you put into the down payment/rehab. If you do a HELOC, then you are not pulling money out and paying yourself back..you are just creating a revolving credit line (more debt) and not putting the money back into you pocket.