Hi Jayson, In some cases it can be a great decision.Take a look at the cost of capital the HELOC or refinance is going to give you compared to what you are looking at now.Also look at the income generated/write offs/appreciation that a rental property is going to give you.If it is going to yield you positive results, I say go for it!

I do not have financing set up yet, but my plan is to use an interest only HELOC to fund the ADU.

If the #s check out via savings or heloc, you can pick up another rental income property in a Medium Cost of Living City vs NYC.

Does this affect a cash-out refinance or pulling out equity in the form of a HELOC/equity loan? 

Does this affect a cash-out refinance or pulling out equity in the form of a HELOC/equity loan?

I also dont want to take out a HELOC because of it eating up my cash flow and end up being net negative.

I also dont want to take out a HELOC because of it eating up my cash flow and end up being net negative.

I'm with you in that I also keep a limited amount in cash because I have lots of assets I could tap if I had to - HELOC, brokerage, etc.I just think new investors are having a really, really tough time buying properties that cash flow right now.   

We have several loans with NASB which is a big player in this space as well as 2 'HELOC' type of loans from a Private Lender at 80% LTV on a couple of properties that we owned free and clear in our retirement accounts, and used that to put down payments on new properties using commercial non-recourse loans.

I spoke to my banker today and he indicated that they won't do a HELOC out of a home that is a rental - only from my personal residence.