New to Real Estate · Pensacola, FL · Member since 2020 · 56 posts · 19 votes
Hey y'all! Looking for some advice. I recently moved due to military orders. I am turning my previous property into my first rental property. I need to replace the roof so I was looking at taking out a HELOC in order to tap into my equity to finance it. The issue I'm running into is that most banks won't give out a HELOC on an investment property. I currently don't live in the property but I do not have a tenant yet. (Should have one 1 Sep). I am looking at some advice with this one either a lending that does investment property HELOCs or a creative way to get around this. I have an excellence credit score, ton of available equity and the property is going to cash flow beautifully. I have been talking with one lender who wants to do an equity loan but to me, I would love to have a HELOC just in case other renovations pop up. I want to be able to tap into that equity for renovations or funding for other properties. Thanks in advance!
Do it now as a primary residence HELOC before you get a tenant. Some lenders will let you apply while it’s still “your residence” on paper, especially if you just moved and your driver’s license / mailing address hasn’t changed yet. Once the HELOC is in place, you can keep it even after renting the property. As a backup, use an interest-only equity loan for the roof now, then refinance into a HELOC later once you’ve built a track record as a landlord.
Do it now as a primary residence HELOC before you get a tenant. Some lenders will let you apply while it’s still “your residence” on paper, especially if you just moved and your driver’s license / mailing address hasn’t changed yet. Once the HELOC is in place, you can keep it even after renting the property. As a backup, use an interest-only equity loan for the roof now, then refinance into a HELOC later once you’ve built a track record as a landlord.
Each loan program has its own occupancy requirements. Since you do not current live in the home in question, it is NOT your Primary Residence. Stating that it is currently your Primary Residence would be considered mortgage fraud therefore that is not an options.
This property is now an Investment Property for you.
Hi Tyler. Instead of a bank HELOC that most won’t do on rentals, we structure a private equity line: roof gets funded now + $75K flexible credit for future deals. Your $20K roof can unlock $200K+ in added value & $600+/mo net cash flow. DM if you want terms that actually work.
I've done plenty of HELOCs on rentals. If you go with a local bank or credit union, a lot of them are not as flexible with their HELOCs. Just talk to a different lender, preferably a mortgage broker who has more options. I'm not sure what the numbers on the property look like, but normally on rentals you're capped at 70% CLTV for a HELOC, although there are some options out there that can go up to 80% CLTV.