I am going to apply for a HELOC for an investment property I own free and clear and then do the B(A)RRRR strategy. I have learned that TD Bank, Wells Fargo, and PenFed CU all offer HELOCs on rental properties. Is anyone aware of any other banks I should be approaching that offer HELOCs on investment properties?
@Ron Gallagher - have you thought about just getting a fixed rate loan instead of a heloc? With the current climate, and the high likelihood of interest rates rising consider getting a loan with a 30 year fixed rate.
I did consider that but I would be paying on the loan while I am looking for a property to buy versus with the HELOC I only have to make payments while I am renovating the rental property I buy in cash from the HELOC. Then I get a fixed 30 year loan on the property after I get it rehabbed and rented out and then I pay back the balance of the HELOC and the HELOC goes back to $0 and I don't make payments until I repeat the process when I find a new rental property. So basically I am my own hard money lender but still interest rates going up, the interest rates from an investment property HELOC is at more favorable interest rates than a HML.
This strategy wouldn't work with a fixed cash out refi as I see it. But I am open to the idea... how would I be able to do the BRRRR strategy with a fixed rate cash out refi?
Howdy @Ron Gallagher
Good plan. I use both a HELOC on my primary residence and a Line of Credit in the BRRRR process. Still using Private Money Lender in the process. My HELOC is with Wells Fargo.
@John Leavelle How has your experience with Wells Fargo been? Since Wells Fargo is the worst offender in banking scandals and they operate a pretty corrupt business I'd prefer not to work with them, but they do offer up to $500,000 for a HELOC on an investment property (versus the more reputable PenFed Credit Union which only offers up to $400,000 and a lower interest rate).
@Ron Gallagher I hear what you're saying about Wells Fargo. They've certainly had their issues. For what it's worth, one of the HELOCs I have on my rentals is with Wells Fargo (opened before the scandal involving them fraudulently opening accounts in customers' names without their knowledge) and I have no complaints.
It's not easy finding banks who will do HELOCs on investment properties, but - as you already know - there are some that will. It's just hard to be picky because there's not a lot to choose from. You can always call around until you find one that works for you. If it helps, here's some things to ask about when making your calls: What You Need to Know When Shopping for a HELOC.
Best of luck.
I’ve got the same strategy going forward. Makes no sense to me to take a lump sum out and begin paying interest while looking for a deal, but the end game will definitely be to refi the cash out of the heloc.
Understand your concern. Have had no issues dealing with WF. I also have other types of accounts with them. Have had multiple loans through them also. They are not my primary Banking institution though. I heavily use local Credit Unions and Local small banks.
Thanks for posting please add if more are discovered :)
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