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?
@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.
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.