HELOC on Investment Property?

Private Lending & Conventional Mortgage Advice
11yFollow

HELOC on Investment Property?

Mike Smith
Dayton, OH · Member since 2014 · 18 posts · 23 votes

Hi, I have an investment property with about 50% equity in it. I am interested in leveraging the equity to do some more real estate investing. I have approached a few banks (including the current mortgage holder) and a few credit unions about obtaining a HELOC on this property. I have been repeatedly told things like: 1) we don't do HELOCs if we are in second lien position behind the primary mortgage holder 2) we only do HOLs, 3) Etc. I have checked with the primary mortgage holder and they do not offer HELOCs.

Does anyone know of any lenders that will do a HELOC in this situation?

Or does anyone have any other ideas on how to leverage this equity?

Note: I'm not much interested in the home equity loan type of offer as I'm not sure when I would pull the trigger on a another real estate transaction (real estate is the side job).

Thanks in advance.

0Reply
284 views

Most Popular Reply

Brian Hayes
Specialist · Powell, OH · Member since 2013 · 86 posts · 23 votes
11y
Originally posted by @Mike Smith:

FYI, I contacted all of the companies in the posts above asking if they have a HELOC product offering for single home investment property in Ohio when they are not the first mortgage holder.

Navy Federal Credit Union has a product.

Pentagon Federal Credit Union (PefFed) has a product.

Thanks for the help!

 I for one appreciate when people get back on here and update us on their results.... thanks Mike! I was curious about the same product

5Reply
See this reply in the discussion

70 Replies

Jump to latestLatest
  • Jassem A.
    Investor · PA · Member since 2013 · 1k+ posts · 602 votes
    11y

    There are probably 100s or 1000s of banks and credit unions you could try.  Here are some more you can try:

    -CBC National Bank

    -Emery Federal

    -Freedom Mortgage

    -Fulton Mortgage

    -PNC

    -USAA

    -Navy Federal

    -Langley Federal

    If you don't have the necessary reserves, you could try a commercial loan or line of credit


    1Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    11y

    Not many banks do HELOCs on investment properties so its going to be a tall order.

    But are you saying that you've found some banks will do a HELOC on an investment as long as they also have the first mortgage as well? If so, then your solution seems simple. Refinance your first mortgage with that bank and then get the heloc from them.

    Otherwise, I think you have to bite the bullet and do a HELO or a cash out refi to get the money. Or just keep calling banks. But they are going to be incredibly rare to find a bank that will do a HELOC on an investment property.

    Given how cheap rates are right now, I'd do a cash out refi if I could and sit on the money. Much like in Field of Dreams where "If you build it, they will come", in investing I like to think that saying can be changed rather easily to "If you have the money, you will find the deal to spend it on".

    So I don't think it'll be sitting on the sidelines long.....

    1Reply
  • Jeff Trevarthen
    Lender · San Jose, CA · Member since 2014 · 122 posts · 27 votes
    11y

    I agree with what @Mike H. said. It's tough to find a HELOC for investment property. Doing a cash out will get you some of your money and it's much more common.

    0Reply
  • Rusty Scott
    Real Estate Broker & Investor · Indianapolis, IN · Member since 2012 · 218 posts · 83 votes
    11y

    PenFed does them in 2nd position up to 75% ltv. Very simple process.

    1Reply
  • Mike Smith
    OP
    Dayton, OH · Member since 2014 · 18 posts · 23 votes
    11y

    FYI, I contacted all of the companies in the posts above asking if they have a HELOC product offering for single home investment property in Ohio when they are not the first mortgage holder.

    Navy Federal Credit Union has a product.

    Pentagon Federal Credit Union (PefFed) has a product.

    Thanks for the help!

    11Reply
  • Brian Hayes
    Specialist · Powell, OH · Member since 2013 · 86 posts · 23 votes
    11y
    Originally posted by @Mike Smith:

    FYI, I contacted all of the companies in the posts above asking if they have a HELOC product offering for single home investment property in Ohio when they are not the first mortgage holder.

    Navy Federal Credit Union has a product.

    Pentagon Federal Credit Union (PefFed) has a product.

    Thanks for the help!

     I for one appreciate when people get back on here and update us on their results.... thanks Mike! I was curious about the same product

    5Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    11y

    @Mike Smith are you saying that you want a HELOC on your investment property?...Not your residence...

    I use Middlefield Bank out of Dublin. 85%LTV, 3.25%APR, they eat all the costs...zero out of pocket...10 yr term with interest only payments...let me know if you need a contact name.

    937-979-7000
    Realize Multifamily Group11 Review
    View Page
    4Reply
  • Mike Smith
    OP
    Dayton, OH · Member since 2014 · 18 posts · 23 votes
    11y

    FYI, I previously stated that Navy Federal Credit Union (NFCU) and Pentagon Federal Credit Union (PFCU) have investment property HELOC products which is correct. Although you must become a credit union member at these institutions to be eligible. NFCU membership is only available to those in or retired from the military or having family in or retried from the military. PFCU membership is a little more open... Make a one-time donation to a military approved charity, donate blood, etc. Contact them directly for more information.

    Second FYI, I contacted Middlefield Bank out of Dublin.  I had a conversation with a couple associates in the residential and commercial lending department.  They expressed that they have flexibility to do a lot of different deals if the numbers work and they sounded eager (unfortunately no investment property HELOCs though).

    0Reply
  • Mitchell Jaworski
    Rental Property Investor · Boynton Beach, FL · Member since 2014 · 273 posts · 197 votes
    11y

    I've also been looking into this as I'm closing a cash deal in a few weeks and want to pull out equity ASAP.   My credit union (Bethpage Federal Credit Union) will offer HELOCs, but only owner occupant residences.  I'm waiting on callbacks from a couple other credit unions, will post any worthwhile info.

    1Reply
  • Robert Schmidt
    Real Estate Investor · Saint Charles, IL · Member since 2014 · 11 posts · 2 votes
    11y
    Originally posted by @Mike H.:

    Not many banks do HELOCs on investment properties so its going to be a tall order.

    @Mike H.
    In Illinois(,Indiana and Wisconsin also I believe), First Midwest Bank is one that makes HELOC on investment properties with terms essentially identical to a typical owner occupied HELOC.
    0Reply
  • Martin Z.
    Glendale, CA · Member since 2013 · 303 posts · 67 votes
    11y

    Try Wells Fargo, i know a couple investors who have it, but their tenants are high profile, not sure if they'll do if the tenant is a mom/pop.

    0Reply
  • Ceril S.Pro Member
    Rental Property Investor · Ithaca, NY · Member since 2014 · 180 posts · 80 votes
    11y
    Originally posted by @Mitchell Jaworski:

    I've also been looking into this as I'm closing a cash deal in a few weeks and want to pull out equity ASAP.   My credit union (Bethpage Federal Credit Union) will offer HELOCs, but only owner occupant residences.  I'm waiting on callbacks from a couple other credit unions, will post any worthwhile info.

    I'm in the same boat - I have calls out here too and will post if I get any info. 

    0Reply
  • Jassem A.
    Investor · PA · Member since 2013 · 1k+ posts · 602 votes
    11y

    I have a HELOC with USAA on an investment property but the interest rate is slightly higher than the HELOC on my former primary residence (also with USAA). I like them because there were very little fees.

    Now that I have a higher DTI, I'm having to do a commercial cash-out refinance to pull out cash and get 4.75% interest on 50k loan. Title work and fees are much steeper--over 3500 compared to a few hundred with USAA.

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    11y

    @Robert Schmidt I actually did try them about a year ago. But they will only do HELOCs on investment properties if you have 4 or less properties. Once you get over that, they no longer off the product. 

    Unless thats changed recently.....

    0Reply
  • Aly W.
    Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Mike H.:

    @Robert Schmidt I actually did try them about a year ago. But they will only do HELOCs on investment properties if you have 4 or less properties. Once you get over that, they no longer off the product. 

    Unless thats changed recently.....

    We hit that limit with TD Bank two years ago. We have 4 Helocs on investment properties with them, 3 of them interest only for 10 years at about 4%. Application fee was only $100. Great deal if you can get it.

    1Reply
  • Matt Ransom
    Memphis, TN · Member since 2011 · 1 post · 0 votes
    11y

    Wow. Great question. I have been hitting roadblocks with local banks in the Memphis, TN market regarding the REI HELOC.

    Looking forward to my first REI, this has been my plan from the onset and I did not think about them not doing a HELOC on a REI property, even if it is paid for 100%. But something tells me that if you had an established relationship with a bank, they would do it.

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    11y

    @Aly W.    Thats not a great deal. Thats a dream deal if you can get it. You said you did 4 with them. Did you have other properties with mortgages at other banks as well?

    What I was told was that because I have more than 4 mortgaged properties, they wouldn't do a HELOC or any other residential loan with me. Nor did they do heloc's as commercial loans.

    Again, that was a little under a year ago so maybe their rules have loosened a bit. 

    btw: What LTV did they go up to on your HELOC?

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    11y

    I am sure there are some here that will do it. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Aly W.
    Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
    11y

    Yes @Mike H. , it seems like a dream since we've found nothing even close to it since then! I believe it was a 70% LTV, maybe 75%, but I'd have to pull the paperwork to be sure. There's a $50 a year annual maintenance fee on each one, and we saved half a percentage point by doing direct debit on each as well.

    We had 2 other mortgages with 2 other banks, yes. An investment property can also be considered a "vacation" home, and if you're married, you and your spouse can each have one.

    2Reply
  • Robert Schmidt
    Real Estate Investor · Saint Charles, IL · Member since 2014 · 11 posts · 2 votes
    11y
    Originally posted by @Mike H.:

    @Robert Schmidt I actually did try them about a year ago. But they will only do HELOCs on investment properties if you have 4 or less properties. Once you get over that, they no longer off the product. 

    Unless thats changed recently.....

     @Mike H.

    The info I got from First Midwest last week was that they will not lend on a purchase or refi if you have hit the 4 mortgages, but they still will do a HELOC. I haven't done it yet, so I can't be 100% sure, but she was pretty specific in the wording, as she mentioned she understands I have 5 already.

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    11y

    @Robert Schmidt   Excellent. Thanks for the info. I have a couple of properties I'd love to give that a shot with. :-)

    0Reply
  • Daniel Foster
    Investor · Memphis, TN · Member since 2013 · 79 posts · 18 votes
    10y

    I know I am late to the part on this post, but has anyone had any additional success in getting a HELOC on an investment property after they have acquired more than 4 properties?

    Thanks,

    Dan

    0Reply
  • Mike Smith
    OP
    Dayton, OH · Member since 2014 · 18 posts · 23 votes
    10y

    Hi everyone, I started this thread... I did ultimately have success at Huntington Bank (www.huntington.com) Got a HELOC at a rate of about 9% (my credit is fine that was just all they were offering). I did this in Ohio and at the time that I applied I already had four existing rental mortgages and a primary residence mortgage. The investment property that I got the HELOC on appraised at 130K and I owed about 70K. Good luck!

    1Reply
  • Account Closed
    Columbus, OH · Member since 2016 · 6 posts · 4 votes
    10y

    Mike is totally right...a very long time ago I worked for HNB and they're very HELOC friendly. They will absolutely have a higher APR than you'll see on your primary home, but I think that's probably fairly typical in the HELOC world with rentals.

    The only problem I think you'll see with HNB is that they will be a little more difficult to work with if you aren't inside of their footprint (OH, IN, PA, WV, KY, and MI).  However, I will say that while skimming this thread I also saw mention of Navy Federal Credit Union.  They offer investment mortgages, I would be they also offer HELOCs, however I've not done any looking.

    HNB's HELOC can be variable or fixed, but the variable is typically a much better rate, and I would certainly make sure you have good credit, they're pretty strict on their credit requirements.

    1Reply
  • Emily B.
    Rental Property Investor · Greater Lansing Area, MI · Member since 2014 · 196 posts · 55 votes
    8y

    Was anyone able to find one that would do a HELOC on an investment property that's held in an LLC?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free