Investor · Denver, CO · Member since 2017 · 37 posts · 23 votes
I'm looking to getting a Home Equity Line on two of my rentals which will give capital to do flips or buy more rentals in the Denver area. Anyone have success with this strategy? I've spoken to a few banks and Vectra Bank in Colorado says I can go up to 80% CLTV. I mean, the equity is just sitting there, sleeping, and I want to put it to work to build more wealth. With one property I could pull out $55K and the other about $45K. So that is $90,000 in working capital I could use to do a pretty serious flip, or buy two or three more rentals.
Rental Property Investor · Novato, CA · Member since 2018 · 110 posts · 145 votes
8y
If u have a bunch of equity, I’m going to assume your rents support the place and the unit cashflows. I try to have every unit cashflow on it’s own.
If it still cashflows with the additional heloc payment, why not?
I have a heloc on my primary residence and saw the rate is up to 6.25%, so I’m not inclined to use it right now.
Just make sure ur comfortable with the payment if heloc rates hit 7-8%.
It’s all just math :)
Littleton, CO · Member since 2014 · 39 posts · 5 votes
8y
Hey Tom, I am in Littleton as well and looking to do the same thing. I have connected with Westerra Credit Union as they seemed to have the best interest only HELOC out of the couple of banks/credit unions that I contacted. Still in the process of getting the HELOC completed. Are you planning on reinvesting in CO, or out of state?
Real Estate Agent · Morgantown, WV · Member since 2016 · 34 posts · 9 votes
8y
I'm doing the same! I have a 25k heloc from a SFH new construction I had built. I'm currently looking for my next deal & plan to use the heloc as the down payment///refinance in 6 months// repeat. Good luck!!
Rental Property Investor · Novato, CA · Member since 2018 · 110 posts · 145 votes
8y
If u have a bunch of equity, I’m going to assume your rents support the place and the unit cashflows. I try to have every unit cashflow on it’s own.
If it still cashflows with the additional heloc payment, why not?
I have a heloc on my primary residence and saw the rate is up to 6.25%, so I’m not inclined to use it right now.
Just make sure ur comfortable with the payment if heloc rates hit 7-8%.
It’s all just math :)
Real Estate Investor · Denver, CO · Member since 2017 · 31 posts · 19 votes
8y
I agree with Derek on making sure your rental numbers work with higher HELOC payment projections. I used one as part of a down payment on a SFR, and am now working to pay it down faster because the interest has hiked up over the past year. Third Federal is who the HELOC is from, they've been good to work with.
Investor · Denver, CO · Member since 2017 · 37 posts · 23 votes
8y
Thank you all for your response. Third Federal said they don't do HELOC on rental properties. I could take my current HELOC higher on my primary residence but kinda rather not. I'm looking to get a HELOC from one of my rentals as that equity is just sleeping like a lazy dog. And actually surprisingly Vectra Bank had a better rate than Westerra Credit Union -- prime + .5% (so 5.5%) vs. prime plus 2% (so 7%). And Vectra can potentially go up to 80 percent CLTV, worse case 75 percent. Westerra max. at 75% CLTV. So at this point I'm going to fill out an online application with Vectra and I had a good rapport with the agent there, and they are local. Unless anyone thinks I should not? Let me know this weekend.... Going once, going twice.... they will probably pull my credit Monday or Tuesday..........
Wholesaler · Lakewood, CO · Member since 2017 · 20 posts · 7 votes
8y
I have a Keybank "High-Value" HELOC on my primary that I'll be using to provide the cash liquidity I need to get started investing. Key has some good programs, as their Standard HELOC goes up to 85% LTV and the High Value will go all they way up to 100% CLTV.
As of now, I'm planning to use it to purchase low end properties out of state and if possible fund the renovations. If there isn't enough for both, I'll look into a hard money or private money lender that will do a low enough loan amount for the given job.
Ultimately, the big idea is to minimize the HELOC use and re-invest my profits back into my own investments so I can begin fully funding my own jobs, or split my own cash into required down payments on multiple simultaneous projects funded with hard or private money.
Wholesaler · Lakewood, CO · Member since 2017 · 20 posts · 7 votes
8y
@Buckner Toney, I just applied online. The process was slow because I also had to dispute their drive-by appraisal. Thank the Lord, my day job is as a mortgage loan processor, so I knew how to do that successfully. I still ended up with a value about $10k below where Redfin estimates my property, but you can only expect so much from a drive by to begin with.
When we closed after 3 months of processing time, we had to go into a branch, and the manager said it would have been much faster if we'd applied in person in a branch. Based on that, I'd suggest doing that. I felt that the Key employees are very personable and happy to make suggestions to help you out, but they aren't super pushy for you to use their products. I'll be returning to try and add a business LOC as well to fund more of each project on my own and minimize how much I need from hard money or private money.
Rental Property Investor · Denver, CO · Member since 2018 · 21 posts · 12 votes
8y
Thanks @Nathan Hayes! You'd think in this day and age that filling out the forms online and using all this technology at our disposal would actually speed up the process, not the opposite!