What are my options? LOC -> Refi?

2 Replies

I have two rental properties right now that would probably be valued around 40K each. Last year I obtained a commercial LOC on these properties for the purchase of another two properties. I now have a balance of $33.6K and $28.7K on these properties, while the other two are free and clear.

I would like a more "traditional" loan rather than this commercial LOC (high interest). I am very ignorant of what options are available to me, if any.

Can I obtain a refinance on the properties that currently have these LOC balances against them? When I apply, does the LOC balance count as money owed, when determining LTV?

Or would I be better off trying to obtain a refinance on the two properties that are free and clear, and just using that money to pay off the LOC? That seems the more obvious route but I'd like some advice on the best approach here.

Edited to add: Part of my problem seems to be the low values of these properties.  I tried lending tree and as soon as I put in the value of the properties it says it doesn't meet the minimum loan amount for their lenders.  I guess no one cares about loaning money it's such a tiny amount?!?!


Have you tried to talk to the bank that gave you the LOC? They can convert these loans to commercial mortgages to free up the LOC money. I used LOC to pay cash for purchase and rehab then converted to 30 yr fixed rate mortgage until I had 10 mortgages. I started using commercial loans after that. I still use this method to build a rental portfolio. Just make sure the properties are still cash flowing after re-fi.

Thank you Nuhan, yes, I did check with them.  But the closing costs they wanted compared to the savings I was going to get just didn't work for me.  I need a very low closing cost deal to make this work on such low value properties.

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