Equity LIne of Credit on Non Owner Occupied

3 Replies

I know this subject has been discussed before, but the threads were relatively old. We are in Washington State and so far I've found one local bank that is willing to offer a line of credit on my two rentals. We have two rentals and our primary residence, with about 50% LTV on all three. The bank is willing to bundle our two rentals with a the cap on the loan at $250K. It would be considered a commercial loan that is a one year term, and revolving, with option of renewing for a nominal fee. It would also be 1% origination and around 6.5% interest. We are also considering a credit line on our primary, but according to the bank that would be a separate line. I've also looked into PenFed which seems to have a few different products that may work, but they are not local, so we are a bit hesitant.

 Our tentative plan is to use the money to pay all cash for properties, then fix and flip. Does anyone have experience with this type of financing? Anyone have any suggestions or advice? 

@Mellisa Otwell , find ways to tap that equity where you can. If you have to pay the origination fee before you actually draw on the loan, you may want to think about how soon you'll draw on it. Having different sources you can draw on rapidly can be a big boon though, as it gives you the flexibility to do a quick close for cash. A HELOC can be a good low cost option, and 6.5% with a 1% origination may be a lot cheaper than you'd pay for a hard money lender for investment purposes. Whatever the costs of your funding are, that needs to be factored into your model.

Just don't over extend yourself and be left holding too many properties if the market turns and you have to hold them longer than expected.

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