Where to get a HELOC on property in an LLC

Question

We have a property in NY with lots of equity.  It is owned in an LLC.  Rents are good. Would like to apply for a HELOC but places I find will only do it if it is not in an LLC.  Where can I find a company that allows the property to be in an LLC?

Jim Kalish · Answer

Maybe its semantics.  But a Home Equity Line of Credit (HELOC) is something that is given on a home to an individual.  Over the last year I've called 97 lenders and if they give HELOCs on rental properties, which most don't, it has to be in a personal name.  I've found 2 that will give a HELOC on investment property held in an individual name; TD Bank and PenFed.  I had did have offers for a business line of credit using an investment property as collateral.  But unlike a HELOC, which is based on credit score and property value, business lines of credit are based on debt service coverage ratio (DSCR).  Basically the lender will evaluate what your debt is, and they really load it up, and what income the property will generate.  Then its just a simple ratio.  Most lenders want to see  income 1.25x the debt.  These types of loans are more expensive than HELOCs and are normally re-evaluated every year or 2.  Now if you want to go the business line route you can try US Bank, but I'm not a fan.  I spent 3 months negotiating with them and what the loan officer told me was way less than what the underwriter offered.  Basically she lied to me over and over again.

Best of luck.

Nick Barlow · Answer

@Joanne Velez regional banks or credit unions.

In my experience, I bought in my personal name, Refi to a new lender with a commercial loan, then got a line of credit from same bank.

Usually they want you to have a checking account with them too.

“Relationships” is the answer to your question. In the pre Covid world, I met mine at a local reia.

I recommend that route, though it’s not the only one.

Joanne Velez · Answer

@Kerry Baird thank you!!

Kerry Baird · Answer

In your area, TD Bank or US Bank might be good choices.  Quorum, Trustco, Upstate Bank are other options.

Joanne Velez · Answer

@Andrew Freed thank you!

Andrew Freed · Answer

@Joanne Velez - Call every local bank, credit union and broker. They have LLC loan products out there for rental properties, but those are referred to as RELOCS and usually don't allow you to grab more than 70% of the equity. They usually have worse terms too compared to it being under your personal name.

In addition, you always have the option of putting it back in your name, getting the RELOC and putting it back into the LLC once its finalized. There is always a chance of the due on sale clause even though that is extremely rare.

Where to get a HELOC on property in an LLC

Most Popular Reply