Heloc On Investment Property???

Question

I am looking to borrow 50k from equity in a 4 unit investment property to use as a downpayment on a personal residence. I know this is rare and no one does it. Let me know your ideas on how to borrow 50k! Thank you !

More Details.

rental property 390k owed

worth 490k

located in MD

purchasing single family home in Macclenny Florida to live in.

More Details.

rental property 390k owed

worth 490k

located in MD

purchasing single family home in Macclenny Florida to live in.

Benjamin Emery · Answer

@Elenis Camargo Just wanted to let you know that I spoke with Pentegon Federal Credit Union this morning and although they used to offer HELOCs for investment properties, I was informed that they do not anymore.

I too am searching for a lender that will allow me to access equity on investment my properties. I'll check out TD Bank though.

Andrew Postell · Answer

@Alana Reynolds yeah, as mentioned above the current loan amount is already over the maximum threshold for this type of thing.  75% LTV and under will get you in the door.

Doug Smith · Answer

Hi Alana, I'm afraid that will either be through a local bank or a local private person looking to lend personal money. Intitutional people like us are going to struggle with a $50K loan. We're just not set up for it. In addition, if you pull $50K out of that property, you'll be sitting at 90% LTV. That's pretty high for an investment property in this environment. I am not wanting to say you can't do it, I simply think it's going to look more like a term/installment loan from a local bank or a private individual.

Elenis Camargo · Answer

@Benjamin Emery Thanks for the feedback! I took out my HELOC with PenFed in pre-COVID. The only restriction they had when I took it out was that you couldn't have more than 3 investment properties in your name. But with COVID and higher rates I know a lot of banks/credit unions have cut back on some of their products, so I guess PenFed did too.

If you are based in FL you can try Space Coast Credit Union. They only offer their products to FL residents and we also took out a HELOC with them last summer. Good luck on your HELOC search!

Elenis Camargo · Answer

@Alana Reynolds, as with most said above it would be difficult to get based on your current LTV ratio on this specific property. To give you some lenders who can explain their terms to you try reaching out PenFed.org or TD Bank. I have used both of them in the past for HELOCs on investment properties and the process was pretty straight forward just like taking out a HELOC on a primary residence.

Also, to give you an idea of how the math works here is an example based on your home's values:

If the lender lends up to 80% of the home's value, the maximum loan amount based on 80% LTV would be $392,000 = ($490,000 * 0.80).

With your existing mortgage balance of $390,000, the remaining available equity for the HELOC would be $2,000 = ($392,000 - $390,000).

Hope this helps!

Matt Devincenzo · Answer

I have a Heloc on an investment duplex, but as others mentioned you need to be in the under 80% LTV range...I think mine may actually have been 70% LTV though I can't recall specifically.

Heloc On Investment Property???

Most Popular Reply