Should I try to get a HELOC?

If they want money and want to stay, tell them to get a heloc or some such and call when they want to sell.

And that many people "sold" their houses by taking out all the HELOCs and cash out refi's they could during the boom and are also underwater.

After all is said and done total refinanced loan will be b/t $110k - $115k at 4.75% with plenty of wiggle room in mortgage payment compared to my monthly income should I decide to purchase another property and want do a HELOC.

If for example you have a 50k HELOC and the lender decides that they are reducing your HELOC to 25k you would owe them the 25k right away.

I was lucky to have setup a HELOC(@ prime -1.01%) early in 2008 with my primary home before the crash really hit, so I had a decent amount of initial capital to use.I was pretty sure I would be buying into a decline, and making mistakes as I started out, so I started focusing on newer REOs but in so so areas (read North Las Vegas) to start. 2008 REOs weren't in the best condition compared to now as banks weren't equipped to handle the load I guess, I remember seeing entire neighborhoods with 50% being REOs and all in pretty beat up condition.

Chris, when I looked at margin rates for my brokerages (Fidelity/Wells Fargo/Sharebuilder/AMTD) they were all very high, like roughly 6%, and I'd like to use this as a form of longer term fixed financing, not short term line of credit.I already have a 250K HELOC @ 1.01% under prime which I can use for short term floats.I like the ability to take out a fixed 3.25% 12 year loan since I don't believe rates can stay this low forever.

Since you will own your property outright, have you considered a HELOC instead of saving up your mortgage payment month to month?

Many first position mortgages will simply issue a 1099.The IRS for an investment property considers this "phantom income".If you are insolvent at the time meaning "liabilities exceeded your assets" then you can file an insolvency form with your tax accountant and the phantom taxes would be wiped out.If your property had mezzanine lenders or secondary loans or HELOC's they will generally act differently then a first position mortgage holder.For the most part the 1st position will recover the most money and the others will fight over the crumbs.It will also depend what your other assets are,if you cross-collateralized loans,and if you had a recourse loan or gave a personal guarantee.Here in Georgia is a lender forecloses and wants to do a deficiency they have to show they sold for current market value.I have seen after foreclosure the defaulted borrower fights the amount the bank sold for as an REO.They disagree with the market value sold for and bring in an appraiser in court.The appraisers generally want to stay out of litigation.The default amount here has to be validated by a judge for the deficiency.Once the defaulted amount is settled then generally the attorney for the bank and the attorney for the defaulted borrower go back and forth over a settlement amount.Once the settlement amount agreement is reached the borrower and bank also discuss terms under which it will be paid.I am not an expert just what I have seen in the field.

I don't see any downside to getting a HEL (or HELOC) if you can find a lender.