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Marissa Gallant
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HELOC on an Investment Property

Marissa Gallant
Posted Mar 9 2024, 06:36

Hello, 

I am new to this space but was looking for some advice on obtaining a HELOC on a home that I am currently renting out. I own the home but I do not live there as my primary residence. I live with my parents and still have a mortgage on the home.

I am quickly learning that many banks do not give HELOCs to rental properties. I have called a couple of local banks, including the one that my mortgage is through, as well as larger banks like Bank of America and Rocket Mortgage.  None offer HELOCs on rental properties that still have a mortgage.

There is nothing I want to purchase right now and I will have tenants in the home at least until the end of this year. I still wanted to pursue a HELOC in case any opportunities came up in the future. I was wondering if anyone would be able to give advice on if there was a chance of getting a HELOC in my current situation. Does anyone know of any lenders or programs that might be open to a HELOC on a rental property? Any advice would be greatly appreciated, thanks so much!

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Benjamin Aaker
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  • Rental Property Investor
  • Brandon, SD
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Benjamin Aaker
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  • Rental Property Investor
  • Brandon, SD
Replied Mar 9 2024, 08:00

Does the rental house have a mortgage? Talk to the commercial lender at that bank. Often the problem is the issue of liens. The primary mortgage is the first lien. If you fail to pay your mortgage, the first lien can get control of the property or recoup money from the loan guarantor - probably you. Other lien positions get what is left. That's a huge risk. But, if the same bank holds both first and second lien, it's less of an issue.

If your property doesn't have a mortgage, you can either get one or get a commercial line of credit. Talk to a commercial banker. 

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Brittany Minocchi
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Brittany Minocchi
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  • Lender
  • Massillon, OH
Replied Mar 9 2024, 08:40

There are lenders that will do HELOCs on investment properties, but the rates are not good. You may have better luck with a cash out refinance, which would allow you to pull equity from the property by replacing the existing mortgage with a new one. Happy to discuss further if you want to reach out! 

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Jon K.
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  • Perry Hall, MD
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Jon K.
  • Rental Property Investor
  • Perry Hall, MD
Replied Mar 10 2024, 09:06

TD Bank used to do a HELOC in second position on investment properties if they were titled in your personal name. Not sure if they still do but it's worth looking into.