Better cash flow but more costs over the life of the house.If you have enough equity on your house, you could find a HELOC that will cost you close to nothing to open (and keep opened) and that could get you that same amount for a short term until you refinance your new acquisition.Just to clarify on my previous post, I talked to a few other banks today and clarified the "call out the loan at any time" possibility and what I was told is that the only thing they could do is limit my line of credit to a lower amount (so I could not borrow more money out of it) if things started going south like in 2008-2009, but they could not just ask for all of the borrowed money back.One of them also clarified that at the 10 year draw, the rate would become fixed to whatever the rate was at the time + 1 or 2% depending on the repayment period.Another point to clarify and that they will lend to you up to 80% of LTV but no more than 50% of the value of your house.A good news though is that the two banks I talked to were offering interest only payment for the draw period (10 years) which fits nicely in the BRRRR strategy since you plan on repaying the money within a year or so when refinancing the property.

No one borrows money to purchase a stock that they know will go down in value.No one borrows money to purchase real estate that they believe will go down in value.Why do we think it's a good idea to borrow money to purchase a car that we know will go down in value? 

He had a borrower but needed a house.

One of the things I keep hearing regarding commercial loans is that lenders typically want your (the borrower) to have a net worth that exceeds the amount of the loan.

I have read that it is difficult for banks to give a loan when the downpayment is borrowed and you could be committing loan fraud if you lie about where the downpayment money came from?

So, you wouldn't be "FORCED to lose the equity by taking the loan on the ARV", you'd WANT to "lose the equity" (ie. borrow against it) - because unused equity can't pay the bills!

Aah - your current 3.99% is better than I thought, but I'd forgotten to factor in that you would have borrowed a somewhat higher amount than you currently owe.

The terms for an Investor LINE of credit are:24 month termInterest only paymentBorrower pays all closing costsBorrower pays a .50% origination feeMaximum 75% loan to value on single family residences70% loan to value Townhomes or CondosRates for credit scores over 725 are prime (currently 3.75%) +.50% to .75% depending on debt to income ratiosThe terms for an Investor Mortgage (fixed);5 or 7 year termPrincipal and Interest PaymentAmortized over 15 yearsRate for 5 year 4.75 – 5%Rate for 7 year 5.75% - 6%Borrower pays .50% originationBorrower pays all closing costs

I've reviewed the borrower's credit report as provided by the note seller and it appears that the buyer filed for Chapter 13 back in 2009.

From my lending experience, this has been around 10-25% of the purchase price depending on the property and the borrower's level of experience.