HELOC question, first time investment

7 Replies

Does anyone have a HELOC? I will be closing on my first investment home in about a month and I was wondering if I should request a HELOC now or wait until I have some money invested in the home. I got it for 95,000 and it is appraised at 120,000- obviously I have nothing invested in the home yet, as I don't own it yet. There are a few repairs that are needed, nothing major, but I would rather get it all done at one time than save and fix one thing and save some more and fix another thing (UNLESS THIS IS THE BETTER THING TO DO) thoughts? ideas? suggestions?

A bank will not offer a HELOC on an investment property. HELOCs can only be obtained on a primary residence. You may want to consider a 203K loan, which provides financing for the purchase and any needed repairs. Not all banks offer 203K loans, you will want to call around to several banks, ideally community banks and credit unions, to find one that will suit your needs.

It is possible to get a HELOC on an investment property. Most big, national banks won't touch them, but you'll find small regional banks and credit unions that will. I have two, as a matter of fact. It's a great tool to grow your portfolio if you are patient and disciplined.

It's not really necessary to close on the HELOC at the same time you close on the house. It's not likely that the same bank holding your mortgage will also hold your HELOC. Also, HELOCs are usually no closing costs- at the most, you'll have to pay for an appraisal, but sometimes the bank will pay for that too, and you can just sign for the HELOC at the bank. If this is something you really want to do, you might start shopping sooner than later, as typically if you have a third party appraisal that is less than three months old, the bank will honor that value for your HELOC and you can avoid spending another $500 on a new one.

Good luck!

You can ask now just to see what interest rate and terms they offer. But usually they will want to wait for a year or at least 6 months. You have to shop around .

It's about 6 mos before you can borrow from your equity. Don't forget with the new tax law tou can't write off HELOC's as if 2018.

Looks like you got your question answered about the HELOC...

I have investors that get equity taken out of the house a few months after the close on the house and after repairs are finished. This is what I have them do: save up, get all of the repairs finished at once, reappraise, and get the HELOC. This all depends on the repairs you are doing. If it really is as you say "minor things" and its a light fixture here and a room painted there, those items wouldn't seem to move the appraised value much. However, if it needs a decent amount of fixing such as new siding and paint, new carpet/flooring, paint, bathroom or kitchen redone, etc. You will want to reappraise most likely. Also, the advise to go and get a 203K loan is not a bad idea either. There are more products like the 203K loan that are open to investors as well. Like Cynthia said, shop around and find the right fit.

This is all coming from my experience in Tulsa, OK while working with investors to get homes ready for renting and for the investor to get cash out of the house after repairs that where needed are finished. 

Originally posted by @Tneshela Jones :

It's about 6 mos before you can borrow from your equity. Don't forget with the new tax law tou can't write off HELOC's as if 2018.

You can still write off the interest on a HELOC if it's used to acquire or improve an investment property.

Here's some more reading on the new tax changes: https://www.biggerpockets.com/renewsblog/real-estate-loopholes-limitations-tax-bill/.

I will also be living there, I forgot to mention. I guess asking the bank is the best way to go! Thanks guys!

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