Investment property HELOC

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Investment property HELOC

John Fano
Member since 2021 · 2 posts · 1 vote

I've been a member of BP for a couple years, but this is my first post. I'm having a financing issue that I'm trying to find a solution to and keep hitting dead ends. I have a 3 family house in Atlantic City, NJ and I'm trying to access some equity. For a few different reasons, a HELOC would work best right now but not many lenders are doing HELOCS on investment properties. I also need a 75-80 LTV (not 70) to be able to access the amount of cash I need. I was wondering if anybody had any suggestions?

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Daniel DeMarco
Accountant · Mars, PA · Member since 2015 · 16 posts · 6 votes
3y

I have done 3 LOC on investment properties. One I grouped 3 properties together that all had good equity. The other was a 16 unit building. I always go with the bank that has first position. This is really how I have went from a few units to just over a hundred in about three years. I use the various LOC for my down payment on the next property and just keep opening LOC on each property as I need more funds. So essentially every thing ish e is 100% financed. This has really allowed me to grow and really about every 2 years I sell my least performing property so I am not taking on too much risk. Each property I learn and improve the purchase and management process. I use small local banks.

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 678 votes
    3y

    Hi John,

    You won't find a HELOC for this specific type of property you are referring to. If you want to access equity easily, you will need a DSCR cash out refinance, which will allow you to get anywhere between 75 and 80LTV. I would recommend working with a broker who has access to multiple lenders and not just one option. Good luck!

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  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    3y

    Hi @John Fano

    I don't know of any HELOCs for investment properties that are more than one unit, but there are HELOANs available. Still second position so no effect to your first mortgage, but it's more similar to a cash out since it's a closed end product and not a line of credit. There are lenders that will go up to 4 units. As for the LTV you're looking for, it will depend heavily on the scenario - especially credit - and you'll max out at 75% absolute best case scenario.

    [email protected]330-354-6590
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  • John Fano
    OP
    Member since 2021 · 2 posts · 1 vote
    3y

    Hi @Brittany Minocchi,

    Thank you so much for your response! Nobody has even mentioned a HELOAN in all the calls I have been making. That would definitely be a great option since I’m not really interested in the revolving credit anyway. My credit is fine so that wouldn’t be a problem. Is there a good time during the week that we can talk so I can run my whole scenario by you?

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  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    3y
    Quote from @John Fano:

    Hi @Brittany Minocchi,

    Thank you so much for your response! Nobody has even mentioned a HELOAN in all the calls I have been making. That would definitely be a great option since I’m not really interested in the revolving credit anyway. My credit is fine so that wouldn’t be a problem. Is there a good time during the week that we can talk so I can run my whole scenario by you?

    You’re welcome! Happy to connect. 
    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC520 Reviews
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  • Daniel DeMarco
    Accountant · Mars, PA · Member since 2015 · 16 posts · 6 votes
    3y

    I have done 3 LOC on investment properties. One I grouped 3 properties together that all had good equity. The other was a 16 unit building. I always go with the bank that has first position. This is really how I have went from a few units to just over a hundred in about three years. I use the various LOC for my down payment on the next property and just keep opening LOC on each property as I need more funds. So essentially every thing ish e is 100% financed. This has really allowed me to grow and really about every 2 years I sell my least performing property so I am not taking on too much risk. Each property I learn and improve the purchase and management process. I use small local banks.

    5Reply
  • Wade Woo
    Real Estate Consultant · Manassas Park, VA · Member since 2019 · 74 posts · 19 votes
    3y

    Is there a positive cash flow on the Atlantic City property?  What are your plans for the credit/loan?  You need to show the lender that you are managing your money well with a good positive cash flow.  Also if you need more than 70% credit/loan then you are over extending yourself and being over leveraged.  You need some cash reserves for emergency situations like for vacancies and repairs.  A good rule of thumb for cash reserves is $10k for the first property and $5k for each subsequent properties.

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  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    I agree with @Daniel DeMarco, the bank holding the primary lien is the one in position to lend on a line of credit. Talk to your current banker to get this set up. Ask for their commercial lender.

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  • Dennis Muno
    Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
    3y
    Quote from @John Fano:

    I've been a member of BP for a couple years, but this is my first post. I'm having a financing issue that I'm trying to find a solution to and keep hitting dead ends. I have a 3 family house in Atlantic City, NJ and I'm trying to access some equity. For a few different reasons, a HELOC would work best right now but not many lenders are doing HELOCS on investment properties. I also need a 75-80 LTV (not 70) to be able to access the amount of cash I need. I was wondering if anybody had any suggestions?


     Hello John,

    So multifamily investment property HELOCs are usually hard to come by. However, investment home equity loans are a way to get equity out of your property to do this. They will be in second position to your first lien loan on your property

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  • Georgeanna Tracey NewmonesPro Member
    Real Estate Agent · Atlantic City, NJ · Member since 2019 · 46 posts · 37 votes
    3y
    Quote from @Daniel DeMarco:

    I have done 3 LOC on investment properties. One I grouped 3 properties together that all had good equity. The other was a 16 unit building. I always go with the bank that has first position. This is really how I have went from a few units to just over a hundred in about three years. I use the various LOC for my down payment on the next property and just keep opening LOC on each property as I need more funds. So essentially every thing ish e is 100% financed. This has really allowed me to grow and really about every 2 years I sell my least performing property so I am not taking on too much risk. Each property I learn and improve the purchase and management process. I use small local banks.


     I loovvvee Daniel's response and think this is how to build up your portfolio much faster. Brittney, I am a local Realtor in the AC market; if you are looking for anything in the city and do not have a local realtor, please reach out.  

    0Reply
  • Amber Welch
    Lender · CA · Member since 2022 · 2 posts · 0 votes
    3y
    Quote from @John Fano:

    I've been a member of BP for a couple years, but this is my first post. I'm having a financing issue that I'm trying to find a solution to and keep hitting dead ends. I have a 3 family house in Atlantic City, NJ and I'm trying to access some equity. For a few different reasons, a HELOC would work best right now but not many lenders are doing HELOCS on investment properties. I also need a 75-80 LTV (not 70) to be able to access the amount of cash I need. I was wondering if anybody had any suggestions?


    0Reply
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