Other than HELOC possible on rental property?

11 Replies

I talked to loan rep for an hour this week about using a HELOC on a rental property I own F&C only to find out later that day that they don't do that except for owner occupied homes. I am planning to call some other banks this Thursday, but wanted to reach out and ask: Is this rather standard to not get a HELOC on a rental property? I'd rather not do a "one time" refinance for conventional financing. The goal is to have readily available access to $20 - $50K that I would quickly repay. Any specific bank recommendations would be appreciated.

I'm in the process of obtaining a HELOC using my local credit union here in the D/FW area. From speaking w the credit union, the process is similar to obtaining a conventional loan - Application, Appraisal, LTV, DTI etc. Even though I'm new to REI, I'd submit to you that it is relatively commonplace for investors to leverage a HELOC for financing deals.

I haven't had luck with HELOC on my rental. I had HELOC on my Primary, and we pull the equity to pay cash for our next investment (saving + Heloc) at the time interest was 2%. and we paid back ASAP. and repeat when we have enough savings.

I believe Wells Fargo does a HELOC on 1st Position Rental, but the terms are not that great and low 60% LTV with fees and high closing costs. I have tried and shopped around before for 1st Position Heloc on a Rental. At least around here it's not common place without a rate hike and high closing costs. 2nd position Helocs on Rentals are very easy to get however and closing costs are usually covered. I have two 2nd Position Helocs on two different Rentals.

@Tim Koger Are you getting a HELOC on an investment property or your primary residence? If investment property, do you mind sharing the bank? I have called 10+ banks in the Dallas area with no success.

Originally posted by @Vince S.:

I believe Wells Fargo does a HELOC on 1st Position Rental, but the terms are not that great and low 60% LTV with fees and high closing costs. I have tried and shopped around before for 1st Position Heloc on a Rental. At least around here it's not common place without a rate hike and high closing costs. 2nd position Helocs on Rentals are very easy to get however and closing costs are usually covered. I have two 2nd Position Helocs on two different Rentals.

I can try Wells Fargo. 

But....wouldn't any lender prefer being in first lien position vice second in a given situation? Why would a second position be easier to get than a first? 

Originally posted by @Tim Koger :

I'm in the process of obtaining a HELOC using my local credit union here in the D/FW area. From speaking w the credit union, the process is similar to obtaining a conventional loan - Application, Appraisal, LTV, DTI etc. Even though I'm new to REI, I'd submit to you that it is relatively commonplace for investors to leverage a HELOC for financing deals.

Tim, it's a rental with which you have the HELOC?

My apologies @Paul Winka , its FOR a rental property not ON a rental property.

@Paul Winka - Not sure. But I got tired of calling around at the time. Didn't need another Heloc anyway. Ended up going for a Commercial Loan Cash Out Refi on the free & clear rental.

@Paul Winka , I also looked at getting a HELOC on a property I own not too long ago where I wanted to pull out my initial investment and rehab costs, but was told by a few lenders they only do cash out re-fi's on investment properties. I didn't pursue other options since I wanted to lower my rate on the property anyway, and moved forward with the cash out re-fi, but would definitely recommend looking at a local credit union to see if they do portfolio lending.

@Paul Winka keep pushing. Banks that offer HELOC's are out there. Local credit unions may be a good place to start. Good Luck!

I went to TD bank yesterday and as long as the owner is under 10 properties, they will do one on rental properties. Owner-occupied properties with TD relationship (checking or investment trading account) was .25 over prime. Non owner occupied is 2% over prime.

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