Cash-Out Refinance vs HELOC for a North Myrtle Beach Landlord

The Quick Read: A DSCR cash-out refinance replaces the existing first mortgage with a larger loan that qualifies primarily on property-level rental income, while a HELOC is a separate line that sits beside the first loan and leans on the borrower’s personal profile and how title is held, subject to lender guidelines.

• A cash-out suits one large, defined need and an LLC-held rental.
• A HELOC suits a landlord who wants most of the money at closing and keeps the first loan, but only if title sits with the individual or a revocable trust.
• On an investment property, the HELOC ceiling in Lendmire’s network is 70% CLTV, with a $500,000 maximum line.
• A cash-out refinance tops out around 75% LTV across most of the network.
• Clearing a coverage test does not mean the property cash flows. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

The honest answer comes down to title, timing, and what you will do with the money. A cash-out fits the landlord whose rental sits in an LLC, who needs a lump sum, or who wants the property to carry the file. A HELOC fits the landlord who holds title personally, has a low-cost first mortgage worth keeping, and can use most of the line at closing. Neither is better in the abstract. The deciding variables are vesting, the size of the need, and whether the first loan is worth protecting.

A North Myrtle Beach rental brings a few local wrinkles. The City’s Rental Property Quick Reference says both short-term and long-term rentals need a city business license, and that licenses do not transfer when a property sells. Keep yours current, because a lender reviewing a rental file may ask for it. That is a different jurisdiction from the City of Myrtle Beach, which runs its own rules. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.

Side-by-Side

The HELOC column below reflects Lendmire’s wholesale network guidelines for investment-property lines. The cash-out column reflects typical DSCR programs placed through the same network. Both are subject to lender guidelines and full file review.

How the Two Products Actually Work

A HELOC is an open-end line of credit. The CFPB describes a borrowing window called the draw period, which could last 10 years, for example. When it ends, repayment begins, and monthly payments are often significantly higher. In some cases the balance can come due at that point. The CFPB HELOC brochure adds that some plans require a minimum draw or an initial advance when the line opens.

On an investment property in this network, the line runs a 5-year draw followed by a 25-year repayment period. At least 75% of the line is drawn at closing, and the pricing floats rather than converting to a fixed structure. That draw-at-closing rule matters. It makes this product less of a standby reserve than the term suggests.

A cash-out works differently. The loan is sized by the property, and two tests run side by side: appraised value against the loan amount, and rent against the full monthly obligation. Whichever binds first sets the cash. Rent evidence typically comes from leases or an appraiser’s rent schedule. At closing the old lien is paid off, costs come out, and the remainder is yours.

When a Cash-Out Refinance Is the Better Fit

Cash-out is the stronger tool when the rental sits in an LLC. HELOCs on this network require title in the individual’s name or a revocable living trust. LLCs, corporations, partnerships, and land trusts cannot hold title. A landlord with an entity-held property would have to deed it out to qualify, which raises liability, title-insurance, and due-on-sale questions for a real-estate attorney. A DSCR cash-out usually lets the entity stay in place, with a personal guaranty, subject to program terms.

It also fits when the need is large. The investment-property HELOC caps at $500,000 and 70% CLTV. A landlord pulling equity for a down payment on the next rental, or consolidating several obligations, may need more room than the line allows. Smaller balances are available through select lenders, and the cash-out path simply offers more room for a big, single need.

Entity-owned portfolios and self-employed owners are the other clear fit, because the file qualifies primarily on rental income covering the payment rather than on personal income. Credit still matters. Most programs want around 660, a 620 floor exists in parts of the network, and 700+ opens the strongest leverage. Reserves commonly run around 6 months of PITIA, though they vary by lender, leverage, and loan size.

For a short-term rental, expect tighter terms: cash-out on STR collateral typically tops out around 70% LTV, with a 640+ score and about 12 months of hosting history. Standard long-term rentals reach 75%.

Two cautions. Cash-out replaces the whole first loan, so a landlord holding a favorable existing mortgage gives that up. And the coverage ratio compares rent to principal, interest, taxes, insurance, and any HOA dues, while repairs, vacancy, management, and capex sit outside it. In a seasonal beach market, that gap deserves a stress test for the slow months. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted, but it is a different path than a standard file.

When a HELOC Is the Better Fit

A HELOC wins on three conditions: personal title, a first mortgage worth keeping, and a need that is modest or arrives in pieces. Picture a landlord who owns a rental condo personally in one of Lendmire’s 16 full-service states, such as North Carolina, and holds an existing first loan they would not want to replace. Because at least 75% of the line is drawn at closing, the fit is best when most of the money is wanted up front, with later draws as a smaller top-up. The line leaves the first mortgage untouched, and the CFPB notes payments depend on the drawn balance.

The qualification path is personal. Credit must be 700 or better on an investment property, and DTI generally stays at or below 50%, qualified on the interest-only payment at the maximum draw. The $500,000 cap keeps the line in the automated-valuation lane, so it commonly closes without a traditional appraisal.

The product is narrow, though. NerdWallet says a HELOC on a rental is harder to get than one on a primary home, and that not all lenders offer one. Property types matter too. Single-family, 2-4 units, PUDs, townhomes, and condominiums, including non-warrantable condos, are eligible. Manufactured homes, condotels, log homes, and commercial or mixed-use properties are not.

Availability is narrower than the DSCR footprint. Lendmire’s HELOC placement covers 16 full-service states, and North Carolina is one of them. South Carolina is not on that list, so a North Myrtle Beach rental would not qualify for a line through this channel. Confirm eligibility before building a plan around it. That is also where the comparison can flip. For a South Carolina property, the DSCR cash-out may be the only product of the two available through the network.

Finally, the payment-shock risk is real. When the draw period ends, payments reset to include principal. A landlord whose rents are seasonal should plan for that transition before the line is drawn, not after.

Three Landlord Profiles

The LLC portfolio owner. Title sits in an entity, the need is a lump sum, and personal income is complicated. Cash-out fits, subject to program terms on entity vesting.

The personal-title owner with a good first loan. Needs a moderate, staged amount. A HELOC fits if the property is in an eligible state and the borrower clears 700 credit.

The short-term rental host. Income is seasonal and harder to document. Cash-out is available at more conservative leverage, and hosting history matters. A HELOC leans on personal credit and DTI instead, so rental seasonality matters less to the qualification, but the draw-period reset still matters to cash flow.

What Can Go Wrong

Sequencing is the main risk. A landlord who takes a cash-out first, then applies for a HELOC, may find the combined leverage leaves no room under the 70% CLTV ceiling. Going the other way, a refinance can pay off a line, but the cash back at closing may change how the transaction is classified. Ask before assuming.

Combining both on one property is possible in principle, but leverage limits apply to the total of all liens, and every file is reviewed individually.

Balanced Verdict

Choose the cash-out when the property sits in an LLC, the need is large and one-time, or personal income makes the HELOC file harder. Choose the HELOC when title is personal, the first mortgage is worth keeping, the amount fits under $500,000 and 70% CLTV, and the property is in a state the channel serves. The larger down payment or equity cushion helps either file, but it never erases leverage caps, credit floors, or property eligibility.

For the broader mechanics, Lendmire’s complete DSCR loans guide covers coverage, reserves, and eligibility. For related angles, see Lendmire’s piece Rental Cash-Out Refinance vs. HELOC for a Landlord Clearing Debt.

If you are weighing a home equity line against a cash-out refinance and want to see how the numbers work, Lendmire can help you compare options based on the property, the equity available, credit profile, combined leverage, and your goals.

For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, and every line is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. City of North Myrtle Beach – Rental Property Quick Reference

2. CFPB

3. CFPB HELOC brochure

4. NerdWallet – HELOC on an investment property