Pulling Equity Out of Investment Property.
Hello all, I hope Thanksgiving was fantastic for everyone.
I am generally new to real estate investing, but I want to really get into it. That said, I own a house in Jacksonville, NC which was a primary residence. We have since moved to Woodbridge, VA, and bought another house as our primary residence. I am looking to pull some equity out of my NC home for purchasing power on the next investment property my wife and I decide to purchase. The issue I'm running into is that some lenders are saying that because it is an investment property due to us having tenants residing in the property, they will not do a HELOC or second mortgage. I am not going to cash out refi due to the fact that I have my NC home at a 2.75% interest rate. I have talked to a couple of commercial lenders who have told me they won't touch residential properties. Does anyone know any lenders that may be able to assist or does anyone have any advice?
Any help is appreciated, thank you, and be blessed!
@Micah Thomas- you are right - most heloc lenders will not lend on rentals ....I would advise reaching out to the smaller to midsize banks and credit unions near the rental to see if you can locate some flexibility on helocs on rentals
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Micah - as Dave mentioned, finding a lender for a HELOC on an investment property can be tough. That said, there are lenders who can do it. Smaller banks/Credit unions are a good place to start or getting in touch with an investor friendly mortgage broker is what I would recommend.
Hey there, a cash-out refi would be a good option. Rates and leverage here can very based on DSCR. Look for a 65-75% LTV Cash-out refinance qualified without looking at income. Closing with private money will be quicker and easier for you
Micah, there is an option for a HELOAN (home equity loan) for your particular scenario. It will allow you to keep your current 1st position interest rate, and this loan would be 2nd position. Rate is much higher, but there is no pre-pay penalty. There are other guidelines as well. Reach out if you'd like additional information.
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Quote from @Jack Tulloch:
Micah - as Dave mentioned, finding a lender for a HELOC on an investment property can be tough. That said, there are lenders who can do it. Smaller banks/Credit unions are a good place to start or getting in touch with an investor friendly mortgage broker is what I would recommend.
I second this. I'll add a recommendation to go to your local meetup. That's a great place to survey other investors and see who they use.
The line of credit is second lien on the property and higher risk of not being paid back if you default. Do you have other property you can offer to secure the loan? You might be able to get a commercial line of credit from the same bank that has your primary mortgage. They will have less heartburn taking second lien because they will already have first.
Quote from @Dave Skow:
@Micah Thomas- you are right - most heloc lenders will not lend on rentals ....I would advise reaching out to the smaller to midsize banks and credit unions near the rental to see if you can locate some flexibility on helocs on rentals
Thank you! Will definitely be looking out!
Quote from @Jack Tulloch:
Micah - as Dave mentioned, finding a lender for a HELOC on an investment property can be tough. That said, there are lenders who can do it. Smaller banks/Credit unions are a good place to start or getting in touch with an investor friendly mortgage broker is what I would recommend.
Much appreciated!
Quote from @Dylan M. Davis:
Hey there, a cash-out refi would be a good option. Rates and leverage here can very based on DSCR. Look for a 65-75% LTV Cash-out refinance qualified without looking at income. Closing with private money will be quicker and easier for you
Thank you for the reply, I really want to avoid a cash-out refi due to my low interest rate on the home!
Quote from @Simmy Ahluwalia:
Micah, there is an option for a HELOAN (home equity loan) for your particular scenario. It will allow you to keep your current 1st position interest rate, and this loan would be 2nd position. Rate is much higher, but there is no pre-pay penalty. There are other guidelines as well. Reach out if you'd like additional information.
Thank you will do!
Quote from @Benjamin Aaker:
The line of credit is second lien on the property and higher risk of not being paid back if you default. Do you have other property you can offer to secure the loan? You might be able to get a commercial line of credit from the same bank that has your primary mortgage. They will have less heartburn taking second lien because they will already have first.
I do but it's in another state and through another lender, haven't had it long enough to do a refinance, great points though. I will remember that for the future!
Quote from @Nicole Heasley Beitenman:
Quote from @Jack Tulloch:
Micah - as Dave mentioned, finding a lender for a HELOC on an investment property can be tough. That said, there are lenders who can do it. Smaller banks/Credit unions are a good place to start or getting in touch with an investor friendly mortgage broker is what I would recommend.
I second this. I'll add a recommendation to go to your local meetup. That's a great place to survey other investors and see who they use.
Definitely need to attend one of those!