Investor · Los Angeles, CA · Member since 2008 · 20 posts · 1 vote
Fellow Investors,
I'd like to obtain a line of credit against the equity in one of my investment properties. If you've pursued a line of credit against an investment property, could you please share your experience(s)? Were you successful? If not, what prevented you from getting the line of credit? If you were successful, which lender did you end up using? Thank you!
I have a line of credit on an investment that was originally made by Wachovia - now Wells Fargo. No fees to write a check on that or on the HELOC on my residence.
@Rob K. can chime in and tell you about his line and lender
I have several HELOC's on investment properties. I like them. You can use the money when you need it and when you don't, it can wait on stand by for free. You only pay interest when you use it. I just closed on a house Monday and used a line of credit to purchase. Another good thing is that the interest is based on prime, so rates are currently low. They could go up in the future, but I have a line from BOA from 2007 that is currently 3.75%. You won't find that kind of deal now and BOA doesn't do these anymore anyway.
As far as places to get them, I have two with Huntington Bank. They were the easiest to deal with and I'm very happy with them. Two is the max that they will do. I also have two with Wells Fargo. They were not as easy to deal with, but still got done. I recently talked to Fifth Third. They offer them as well, but wouldn't touch me do to the amount of mortgages that I have.
The benefits that I like are that the closing a costs are very low and the money can be borrowed and paid back over and over. I really like using a line from one house to purchase another. It makes for a fast cash transaction with no fees. You can always sell or refinance the new house, pay the line back, and then use it again for the next house.
Personally, I'd rather re-finance it and get the cash tax free (see a CPA for exact details). But if you can borrow more than you can refinance, I wouldn't do it just to do it. I'd have a very specific property I would want to invest it in and run the numbers. If it still meets your goals even with that payment, then go ahead.
Not a lot of people realize that a line of credit usually has a fee to withdraw and after some time they shut it down anyway because they require a new credit check. It's not worth it IMO unless you need a specific amount (and draw only that amount) and make sure your numbers on the property you are putting it into still work.
I'll take the line of credit for the following reason:
- If i don't need the money, i don't withdraw, hence no interest charge until i find the deal.
- It creates a lien on investment property: asset protection.
Normally LoC is good if you need money for a relatively short time, pull out and put it back. If you can refinance with a conventional loan, it will trump the LoC
Kevin
I have a line of credit on an investment that was originally made by Wachovia - now Wells Fargo. No fees to write a check on that or on the HELOC on my residence.
@Rob K. can chime in and tell you about his line and lender
I have a line of credit on an investment that was originally made by Wachovia - now Wells Fargo. No fees to write a check on that or on the HELOC on my residence.
@Rob K. can chime in and tell you about his line and lender
I have several HELOC's on investment properties. I like them. You can use the money when you need it and when you don't, it can wait on stand by for free. You only pay interest when you use it. I just closed on a house Monday and used a line of credit to purchase. Another good thing is that the interest is based on prime, so rates are currently low. They could go up in the future, but I have a line from BOA from 2007 that is currently 3.75%. You won't find that kind of deal now and BOA doesn't do these anymore anyway.
As far as places to get them, I have two with Huntington Bank. They were the easiest to deal with and I'm very happy with them. Two is the max that they will do. I also have two with Wells Fargo. They were not as easy to deal with, but still got done. I recently talked to Fifth Third. They offer them as well, but wouldn't touch me do to the amount of mortgages that I have.
The benefits that I like are that the closing a costs are very low and the money can be borrowed and paid back over and over. I really like using a line from one house to purchase another. It makes for a fast cash transaction with no fees. You can always sell or refinance the new house, pay the line back, and then use it again for the next house.
by the way, do you need to take HELOC in advance and season it for 2 months before using it as a downpayment for the next property ?
Do you mean put the advance money from the HELOC into an account and let it sit there in order to use that money as a down payment? If so, I'm not sure. I have enough security deposits sitting in an account that I always show enough money for a down payment, even if the down payment is coming from somewhere else.
What kind of docs are required for a LOC? I have several paid off properties that I'd like to get a LOC on but income, DTI, would both be an issue. Do they allow for stated income or no income verification?
So purchasing via HELOC on 100% make sense, but is it a good idea to use HELOC from one house to put 20% down to another one and finance the rest?
Example:
$100k house
HELOC = $20K
Finance $80k for 4.875 (since rental property is in higher %).
this means i'll be paying P&I towards conventional loan and payment for HELOC as well and even with rent coming-in will property still give out +ve cash flow?.
My name is Duriel Taylor. I recently saw a post you made in regards to line of credit processing. At your earliest what would be your advice to someone that will like to start in this investment scope with zero assets and or down payment? I do have an investment property that I have a mortgage on and I had it for 5 years now. This duplex has a positive cash flow of $400 per month from the tenants after the overhead (ie water bill, grass cutting, and mortgage). In terms of LOC, what would be your advice on obtaining and using effectively on of these funding options? I look forward to hearing from you soon. Take care.
Thank you for your feedback. I will explore this option in the coming days. If you have any lenders that I could contact I would greatly appreciate it as well. Enjoy your evening and take care.