Creative Real Estate Financing

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Using Someone else’s HELOC for Long term rental

Posted Jan 17 2022, 19:24

Hi… I am a new investor located in Philadelphia. I currently have one rental property which just passed a year of ownership. I am interested in ways to acquire additional rental units using someone else's HELOC. How would a deal be presented and structed in order to make it beneficial for them to allow me to use the HELOC to fund the purchase and repairs before converting to a traditional mortgage? Interest payments, profit splits, equity splits? All options will be considered, thanks!

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Andrew Postell#2 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Fort Worth, TX
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Andrew Postell#2 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Fort Worth, TX
Replied Jan 19 2022, 18:33

@Mark Anthony DeJesse Jr you are just talking about private lending. This is pretty normal. It will be similar to hard money. Someone lends you money, you file a lien on the property, you pay them interest. You'll need to offer enough interest over their interest rate on their HELOC to make it worth it but it's pretty standard stuff. Finding private lenders is pretty challenging but if you do find them they can really help a deal be a better deal. Hope all of that makes sense. Thanks!

Lender Texas (#392627)

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Bill Brandt#2 General Landlording & Rental Properties Contributor
  • Investor
  • Las Vegas, NV
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Bill Brandt#2 General Landlording & Rental Properties Contributor
  • Investor
  • Las Vegas, NV
Replied Jan 19 2022, 18:43

Make sue they know they could lose their house if you don’t pay them and they couldn’t afford to pay it themselves. Not a big deal on small amounts, but something  aware of. Pry offer 8-12% and a short payback period with plenty of equity and a lien for them against your purchase property to make them feel better. (I doubt they really want the property so it’s mostly feel good.)