Looking for a HELOC on an investment property.

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Looking for a HELOC on an investment property.

Elwin Green
Investor · Pittsburgh, PA · Member since 2024 · 17 posts · 7 votes

Happy Friday! Looking for a recommendation.

I have a property that my company owns free and clear. According to Realtor.com, it's worth $120k.

I'd like to tap into that equity with a HELOC.

Has anyone here gotten a HELOC on an investment property? If so, who was the lender, and how was your experience?

TIA!

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Carlos Valencia
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
2y

Hello Elwin, 

If its free and clear you should just do a cash out refi. It will be a more cost effective rate than a Heloc. Helocs are almost like hard money rates lol. HElocs are prime 8.50% plus 2-3% depending on the Heloc product you use. Refis are more in the 7-8s for investments. 

@Albert Bui @Matthew Kwan

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    2y
    Quote from @Elwin Green:

    Happy Friday! Looking for a recommendation.

    I have a property that my company owns free and clear. According to Realtor.com, it's worth $120k.

    I'd like to tap into that equity with a HELOC.

    Has anyone here gotten a HELOC on an investment property? If so, who was the lender, and how was your experience?

    TIA!


    Elwin, in general, HELOCS are second lien position products. I have yet to see in my years a first lien HELOC. HELOCs for investment properties are 2x higher in rate usually due to the higher risk factors placed oon them by fannie/freddie and a more conventional risk assessment is applied when underwritting them. Meaning, no DSCR PITI wash underwrites - it will be based on income plus applied vacancy factors. There are DSCR HELOANs but again, yu are free and clear. I think your best bet here is a DSCR cash out. Happy to chat and walk your through every option out there! Good luck!

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
    WebsiteView Page
    0Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    2y
    Quote from @Elwin Green:

    Happy Friday! Looking for a recommendation.

    I have a property that my company owns free and clear. According to Realtor.com, it's worth $120k.

    I'd like to tap into that equity with a HELOC.

    Has anyone here gotten a HELOC on an investment property? If so, who was the lender, and how was your experience?

    TIA!

    30Y fixed DSCR loan with a little to no prepayment penalty would be your best option. HELOC's on investment properties are hard to come by and like Devin said, they are 2nd lien products. Feel free to reach out and discuss options.  
    [email protected]413-348-8346
    Freedom Capital Funding, LLC523 Reviews
    WebsiteView Page
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  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    If anyone will do this, it will likely be a small local bank or credit union that you have a banking relationship with. These are typically one-offs and depository institutions are in the best position to offer them. Most of these that I have seen recently have been commercial lines of credit collateralized by the property. 

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  • Elwin Green
    OP
    Investor · Pittsburgh, PA · Member since 2024 · 17 posts · 7 votes
    2y

    Thanks for all of those responses. Perhaps I should have provided more info. I bought the house in June (titled it to my corp), and am preparing it for Section 8 occupancy as of October 1. So there is no current income for calculating a DSCR; that's why my mind went to HELOCs. Also, while the work to be done on the house is not major, I was hoping to have the house pay for it.

    If a lender will do a DSCR based on a Section 8 proforma, that would be great. So far, I have one lender with whom the HELOC convo was actually going well until the matter of the house being owned by a business came up; then she redirected me a commercial loan (which may be what happens).

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  • Carlos Valencia
    Lender · 92703 · Member since 2022 · 326 posts · 538 votes
    2y

    Hello Elwin, 

    If its free and clear you should just do a cash out refi. It will be a more cost effective rate than a Heloc. Helocs are almost like hard money rates lol. HElocs are prime 8.50% plus 2-3% depending on the Heloc product you use. Refis are more in the 7-8s for investments. 

    @Albert Bui @Matthew Kwan

    1Reply
  • Elwin Green
    OP
    Investor · Pittsburgh, PA · Member since 2024 · 17 posts · 7 votes
    2y

    Hi Carlos - is a cash out refi doable with a property that is not yet producing income?

    0Reply
  • Carlos Valencia
    Lender · 92703 · Member since 2022 · 326 posts · 538 votes
    2y
    Quote from @Elwin Green:

    Hi Carlos - is a cash out refi doable with a property that is not yet producing income?


    yes there's many programs you can use DSCR, or conventional. They will just use the market rents form the appraiser and you will need to have reserves 6-12 months. Even if the property is already rented out.

    0Reply
  • Austin ClarenceBusiness Member
    Lender · Phoenix, AZ · Member since 2023 · 135 posts · 31 votes
    2y
    Quote from @Elwin Green:

    Happy Friday! Looking for a recommendation.

    I have a property that my company owns free and clear. According to Realtor.com, it's worth $120k.

    I'd like to tap into that equity with a HELOC.

    Has anyone here gotten a HELOC on an investment property? If so, who was the lender, and how was your experience?

    TIA!


    Hi Elwin, I have access to a few HELOC options for investment properties. Several of which require no appraisal, you can apply and get an instant offer after a soft credit check. Please let me know if you have any questions

    [email protected]650-906-2376
    Austin Clarence with NEXA Mortgage551 Reviews
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  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y
    Quote from @Elwin Green:

    Thanks for all of those responses. Perhaps I should have provided more info. I bought the house in June (titled it to my corp), and am preparing it for Section 8 occupancy as of October 1. So there is no current income for calculating a DSCR; that's why my mind went to HELOCs. Also, while the work to be done on the house is not major, I was hoping to have the house pay for it.

    If a lender will do a DSCR based on a Section 8 proforma, that would be great. So far, I have one lender with whom the HELOC convo was actually going well until the matter of the house being owned by a business came up; then she redirected me a commercial loan (which may be what happens).


    I understand you want to access the capital ASAP but I'd focus on getting it rented.

    That said, if you have the bandwidth, you could do both processes simultaneously. Get a standard 30-year DSCR on it and start the process now.

    They all love to tell you how fast they are, but it will likely take you a month to get it all done anyway. By that time you may very well have the tenant in place. Or, at a minimum, the DSCR is ready to go pending a signed lease agreement.

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  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    2y

    I’m currently doing the process mentioned by @Travis Biziorek, and am super happy with the DSCR mortgage when I do. DTI had become my hurdle, making regular plain vanilla mortgages difficult.

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  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y
    Quote from @Kerry Baird:

    I’m currently doing the process mentioned by @Travis Biziorek, and am super happy with the DSCR mortgage when I do. DTI had become my hurdle, making regular plain vanilla mortgages difficult.


    Nice, and congrats! What rate are you seeing on the DSCR? I had to do one about six months ago at 8.0% (oof!).

    0Reply
  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    2y
    What do you need to tap into that equity for? If you can get a conventional mortgage for the amount you need, then that is the way to go.
    For a line of credit ask for the business banker at your local bank and discuss a business or commercial line of credit. I've used these many times. They should be used only if you need to have money ready for a future deal but don't have the deal yet. The money stays available but you are not paying interest, just an annual fee. Make sure the new property can cash flow the LOC as well as its own mortgage.
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