Prep Steps for Getting HELOC or Equity Loan Unfinished Property

4 Replies

So we are brand new to this! 

My husband and I want to use our current equity to buy another residence, either single family home or duplex for a rental. The home we currently live in is an old church turned into a duplex, we purchased it two years ago. We are in the process of renovating it ourselves. We do have people renting the basement unit currently (we renovated that part first). We are wondering if we can go ahead with the bank, which I know requires an appraisal of the current state of the house. My concern is we are still stripping off lead paint from the exterior of the home in sections and then repainting as we go, we will most likely be presenting an unfinished property to appraise. The inside is in good shape its mostly the exterior we are concerned about. Do banks also require Inspections as well? 

Should we wait 6-8 more months (due to weather constraints) to finish the project before trying to get equity for another investment property? Or can we go ahead with everything?

When we bought the property we did put 20% down on it and the market value for homes here in Colorado in our area has gone up quite a lot since we bought it. 

Any help is greatly appreciated! 


@Chrissie E Lewis If you're wanting to maximize the equity you can draw from your current home, it might be best to wait until you have everything in tip-top shape for the appraisal. You shouldn't need an inspection unless the appraiser notes severe structural damage that would require a specialized inspector to look at.

@Chrissie E Lewis Most banks will work with you on a HELOC on your primary residence. Most will require a credit score of at least 680. Most will allow 15k-500k. Some are picky about multifamily, so make sure you ask that question up front. Some will do a "tax value appraisal" others a full appraisal. Must have insurance on the property, none I have found require the inspection.

I would not worry about the painting, the appraiser is going to look at the value of the home based on other homes of similar square footage in the market. He/she should not be "grading" you based on your paint on the house. You can tell 'em that the HELOC is to help get the house painted. Duh.

Once you have the HELOC, I would be out looking for the next property. You can look now, get your ducks in a row. Get a list of contractors together to help with needs (power, plumbing, paint)

Best of luck to you and your projects! 

@Chrissie E Lewis I am in a similar situation right now. Based on conversations with everyone, it seems that a HELOC on a primary residence is the best way to go. You save on the closing costs, and fees, but still have access to your equity. In addition, the line of credit will always be available to you once you pay it down, which is nice to have in an emergency.

The only difference in my situation is that I am looking to get a HELOC against my investment property, instead of my primary residence. If anyone reading this thread has any advice, it is more than welcome.

@Chrissie E Lewis so not sure if this would help or not but there are credit unions that seem to have an appetite for HELOCs. I used Westerra Credit Union a few years ago and got a HELOC on my SFR primary for less than $100k with no fees, points or appraisal. Your mileage may vary. Not sure if they would lend in your area either but there should be a CU in your area that would do it. Start dialing for dollars

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