HELOC? Other Financing Recommendation? Please Help

10 Replies

Hello Everyone!

I have a few properties which collectively appraise around $230K, with $42K of associated debt. 

I would like to obtain more properties. I have done some research and I am lean towards a HELOC on all the properties to unlock ~$140K (230-42*.75) for doing this. A HELOC will give me the flexibility of having cash for repairs, negotiation, ect.

If there is a better financing option PLEASE enlightenment me. 

Also, does anyone have any recent experience with a bank offering HELOCs/HELs? Any suggestions?

Thank you for the look!

-Lee 

Updated about 3 years ago

(230*.75)-42: $130K Miscalculation

Just a note on your calculation. Providing you can have loans secured on your property up to 75% of its value,  I think the correct  calculation is (230*0.75) - 42 : Which gives you 130k

Originally posted by @Patrice Penda :

Just a note on your calculation. Providing you can have loans secured on your property up to 75% of its value,  I think the correct  calculation is (230*0.75) - 42 : Which gives you 130k

 Yes Patrice is right on the calculation.  You can borrow a certain percentage of the total property value, not a percentage of equity in the property.

Originally posted by @Patrice Penda :

Just a note on your calculation. Providing you can have loans secured on your property up to 75% of its value,  I think the correct  calculation is (230*0.75) - 42 : Which gives you 130k

 yes, you're right, thanks

Originally posted by @Lee Kozokas :
Originally posted by @Patrice Penda:

Just a note on your calculation. Providing you can have loans secured on your property up to 75% of its value,  I think the correct  calculation is (230*0.75) - 42 : Which gives you 130k

 yes, you're right, thanks

We recently set a HELOC with American Heritage credit union with a fixed rate of 3.99%, 3 years draw period and 10 years Amortization period . They also have some variable rates, you can give them a call and discuss your particular situation. One thing from our experience when shopping for HELOC , don't mention the purpose of your Heloc, they generally don't care. But some of them like TD bank, for example, told us " If you would have mention to us that you need HELOC to buy investment property we would have to deny your application." What does that tell you? Just don't mention it, or say for renovation of your primary house.

Good luck

Lee,

How quickly do you want to grow? $130,000 will not go all that far?  If you are doing 1-2 -3 deals per year ok, but if really want to grow at a reasonable fast pace you should consider leveraging these funds 5X and get a revolving acquisition and rehab  line of credit?

@Lana Lee Thank you! Great tip. Unfortunately everyone I speak to knows it's for investment out the gate as soon I provide them with more than one property, followed by them asking my address (I'm away from the properties, renting, due to work) Thanks again! :)

@Bob Green Bob, thanks for the reply! Wow... I never even heard of that, just did a quick search and it looks like a much better option than a HELOC so far. More research to come.

Any more insight on this? I would like to grow as fast I responsibility can, been at it since 2011 and obviously I have been missing something. Thanks again!

Originally posted by @Lee Kozokas :

@Lana Lee Thank you! Great tip. Unfortunately everyone I speak to knows it's for investment out the gate as soon I provide them with more than one property, followed by them asking my address (I'm away from the properties, renting, due to work) Thanks again! :)

 No one asked us how many properties we have, just income. We provided W2 and Tax return that's about it. They really don't care.

@Lana Lee My problem stemmed from trying to get equity out of 3 of my properties.  Apparently it's hard to find a bank will do to HELOCs for investment property, especially if you want to "bundle." Though I did find 2 banks willing and I just started my research this morning. Home values are really low where I am investing, which is why I would only get $130K equity out of 3 separate properties. I wouldn't be able to do much with a HELOC on 1. Thanks!!!