Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

HELOC vs Refinance??

REIGirl

Inspired Forum Member
Registered
Joined
Jun 7, 2017
Messages
43
Hello!

My husband and I are planning to invest in a multifamily building/apartment building and to access some capital we are wondering which would be the better approach, refinance our primary residence with a mortgage or get a HELOC? The mortgage interest rate from the refinance will be cheaper, however the HELOC will offer more flexibility in terms of repayment.

Your insight is appreciated. Thank you!
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Hello!

My husband and I are planning to invest in a multifamily building/apartment building and to access some capital we are wondering which would be the better approach, refinance our primary residence with a mortgage or get a HELOC? The mortgage interest rate from the refinance will be cheaper, however the HELOC will offer more flexibility in terms of repayment.

Your insight is appreciated. Thank you!

Is the goal to grow an asset base or to be debt free?

Assuming it’s to grow your net worth then refi !


Then it’s real cash. And it’s cheaper.

Repayment not the goal until you’re old.

Growing your networth means more asset but also more debt. Then, many years or likely 2-3 decades later, when you have many more assets you have to discuss selling or refinancing some of them all the time. More thoughts on this here



Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 

REIGirl

Inspired Forum Member
Registered
Joined
Jun 7, 2017
Messages
43
Thank you for your input. We plan to refinance and will likely invest the money into an apartment building. Excellent article too!
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Thank you for your input. We plan to refinance and will likely invest the money into an apartment building. Excellent article too!

Apartment buildings very pricey these days, except SK and AB. Budget 5% cap rates and sub 70% LTVs.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 

REIGirl

Inspired Forum Member
Registered
Joined
Jun 7, 2017
Messages
43
Thank you! Do you have any suggestions as to what might be a better investment other than apartment buildings - without too much risk (I know that is subjective)

I'm trying to figure out how best to invest our money after we refinance so it just doesn't sit in the bank doing nothing
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Thank you! Do you have any suggestions as to what might be a better investment other than apartment buildings - without too much risk (I know that is subjective)

I'm trying to figure out how best to invest our money after we refinance so it just doesn't sit in the bank doing nothing

A loaded question worthy a PhD for a good answer - and well beyond the scope of a single blog entry.

What do you think financial analysts do all day?

What’s better? Tesla or IBM shares? BitCoin, Ethereum or Cardano ? High tech stocks like Apple or Netflix or value plays like Walmart or Telus ? A commercial strip mall or a hotel? A REIT or a duplex? A house in a smaller town or in West Van? An apartment building in AB or ON ?

What’s low risk to you? An apartment building in all cash or 50% LTV mortgage ok? 75-80%? A building less than 10 years old or older than 25 years ok ?

If I knew these answers I’d tell you. And I have done only 1/4B of real estate transaction in over 20 years. Others have far FAR more expertise and still ask themselves this very question daily, often with 3 to 5 more 000 attached to your $ figure - yet still fail or lose money on occasion.

I’d buy a SF home or two with 3-400,000, in a scenic town in BC or ON, or in AZ, TX or FL - ie immigration cities with upside. Or a TH. Or a duplex. Or a REIT. Or covered calls. Or put spreads. Or gold. Or Bitcoin. Or a small (or a large) apartment building. Or lend directly or via a MIC. Or bank stocks. Or ETFs with a yield. Or a piece of land and sub-divide. [ btw I did or still do all these but can’t honestly tell you what’s better or lower risk ]


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
Last edited:

REIGirl

Inspired Forum Member
Registered
Joined
Jun 7, 2017
Messages
43
LOL, a loaded question indeed! I suppose I'm heading down the path of analysis paralysis :)
Thank you again for your response!
 

EduardoFrank

New Forum Member
Registered
Joined
Mar 25, 2023
Messages
1
Hey there! Thanks for reaching out on this old forum - what a great idea to invest in a multifamily building. I'm new to this scene but have a decent understanding of HELOCs and refinances, so hopefully I can help. The major tradeoff here is flexibility – a refi usually means a loan with a set repayment plan, whereas a HELOC has more of a head and shoulders pattern – it can be used as needed and then repaid. However, the refi may offer a lower interest rate, so think about how much you'll really be needing from the HELOC and what you need to pay for it. Do your research and assess the pros and cons to pick the solution that works best for you. Best of luck!
 
Last edited:
Top Bottom