How do I get a line of credit from my existing equity?

Question

Over the last few years I have been using flipping as a primary way of raising capital for my buy and holds.  Using this strategy I have built my holdings to over 200 k in equity.   I would like to start leveraging that and putting it to work.  The issue I keep running into is that lenders want to be in 1st position. Meaning they will not allow me to use my equity to obtain a line of credit.

I would rather not do a HELOC on each property due to the associated closing costs with each loan.

What can I do in order to tap into this equity and put it to work for me?  Are there any lenders that will take a 2nd position?  Who are they?

Teri Feeney Styers · Answer

@Jason Smith it sounds as if you own multiple rentals with a TOTAL of $200k equity - not just one correct? If that is the case then you need to talk with a local bank that does portfolio loans. I just had a client buy a property by drawing some equity out of multiple properties and financing the rest. The "down payment" came via the portfolio loan package as did the long term mortgage. However, @Josh C. is correct - they are only going to loan you a percentage of the value of all the properties added together. HELOCs are the same way - max is 80% ltv - they are also usually for a primary residence. And yes, they will take a second position.

Corby Goade · Answer

Most HELOCS are no closing cost loans. They're really the cheapest money available out there. If you haven't found a bank that will give you one, keep asking. That's how we built our portfolio, and other than cash, I wouldn't do it any other way. Don't give up, keep pushing, keep calling banks.

Corby Goade · Answer

You can get HELOCs on multiple properties and they do not have to be primary residences- for a HELOC on a primary residence, you can go up to 95% LTV, for non-owner occupied usually the max is 65% LTV. When you start borrowing that much money through multiple HELOCs, the limiting factor tends to be DTI, not equity.

How do I get a line of credit from my existing equity?

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