Keep rentals on my HELOC or refi?? Help a Newbie!

This is simpler than it’s going to sound… I bought a house in 2005 as a rental. Put 10%. It’s at 6.88% on a 30yr. mtg. Can’t refi, as market down too low here. I’m happy w/my Metro hsg. tenant.
Bought house #2. in late 2008, for 34k on my own home’s HELOC, then used my savings to pay it off. (I know, I’m too cautious, but it was 30k to pay off)
This June bought #3. for 60k, put 10k cash, financed the rest w/my HELOC again. Then found #4 & closed last week, paying only 28k for it completely with my new HELOC, which is good for up to 90k, at 3.89%. My question is; Do I refi #2, since its been over a year, and use that $ to pay down the HELOC, and then refi #s 3 &4 when I’ve owned them a year? This will have each on a mtg. and my home won’t be involved in the debt. I’d then have the HELOC open to buy another if it comes along.
We have no personal debt, own cars free & clear, and no credit card debt, etc. Am trying to be financially saavy, but am struggling.
Plan on keeping all these rentals, and would like to do a wrap around loan on 2 newest ones to the tenants next year, with hopes of increasing my income that way.
I’m also wondering how the heck this is going to be for taxes, with 2 rentals on the same HELOC.

I liked your effort–plus you just kept paying off that HELOC! I would not put new loans on those houses-- mortgages and appraisals are really expensive as far as closing costs. You don’t need to do it.

If you have a free-and-clear house you can also sell it in a hurry with owner financing.

You have such a good record of paying off that HELOC, so just keep doing it. That is your lowest cost option. Use all that rent to hammer that HELOC down. You should be free of it in short order, or have it paid down enough to get the next good deal.

You are being your own bank! There is no problem with having financed 2 houses with one HELOC loan, it is, in effect, a blanket loan and your accountant can deal with those numbers just fine. Don’t worry about having that debt on your home; you are not going to default. You deal with debt just fine.

This was a very interesting problem to have. My hat is off to you!


I am curious about this line of thought because I was thinking about exactly which route to take with my first purchase, buy the house for 100% cash at a discount and take out a HELOC to purchase rentals on a regular basis after paying down the balance.

There are some properties I am looking at, average discount ranges from 30 to 50 percent which makes this easy enough to purchase 100% down and utilize some kind of strategy to go from there.

I know there’s other ways to go, 20, 10, even no money down but I am interested in hearing more about this line of thought. Further comments are welcome.

Silvergreenery, keep us up to date on your experience here. Thanks.