LOC on a SFH with a VA loan

[Tyler Buck]

(POST TITLE SHOULD BE THAT THIS IS A RENTED SFH)

I have a previously occupied SFH that is with a 2.75% VA loan. I've had it rented out for about 4 years now and it's sitting around 180k remaining with a market value of 330k-340k.

I'm finishing up another renovated townhouse in the area and that one went up from 1200 to 1650 monthly rent and it garnered about 75 inquiries in 12 hours. So there's a seriously hot market for rentals in my area. I have a few in mind that would be worthwhile to acquire and rent out with minimum alterations. I'll have to leverage some capital from the above to make those work.

I really don't have any appetite to refinance a 2.75% with a 6%+ rate to leverage the equity. I used an LOC on my primary to close on a duplex this year, so I can't touch that for now. I think a LOC would be the best option on this other SFH, but I haven't found too many lenders that could accommodate that.

Any ideas or other suggestions?

[Andrew Postell]

@Tyler Buck I cannot tell what state your properties are in but maybe it won't matter.  Usually it's hardest in Texas, so I'll answer it for Texas and for everyone else just in case it get's researched.

1. Texas - Cash out loans of any type are pretty challenging here in Texas. Because of this many lenders won't do these loans at all. Finding a lender that does investment property "Lines of Credit" is hard in any state...but here it's even harder. I know 3 that write them locally in DFW...and only one of those will do it state wide. But am certainly willing to share any information if you just PM me. No problem.

2. For everyone else....a small, local lender will be your HIGHEST probability of success when trying to find "Line of Credit" lenders on investment properties. The unfortunate thing here is that investment properties foreclose at a higher rate than primary homes so many banks just don't want the exposure to this. But it is 100% possible to find but you have to put in the time or at least know someone that ALREADY has the connection. Here's my 2 suggestions:

1. Visit your local REI groups. There are many groups that meet across the country. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.
2. Calling - and then there's this option. Which is what I had to do. I had to call about 200 lenders (no exaggeration) to learn of 4 lenders who did this and I have some tips. First, when calling banks target the smallest most community based banks you can first. If you have never heard of them, and they have one location - that's a good candidate. No big, national, publicly traded banks will do this loan type. Second, try to ask for "LINES OF CREDIT" instead of "HELOC". I know it sounds like I'm splitting hairs but some banks write HELOCs in their residential department....which won't write Investment Properties. And that residential department will often not speak to the commercial department. So they'll just say "sorry, we don't do it"....not even knowing that they really do! So if you ask for a "line of credit on an investment property" that should get you to the COMMERCIAL division. That's the section of the bank we want. Now, most of these smaller banks may only have 12 employees or so. So don't get frustrated if they don't return your call or aren't in the office. Just call back and be friendly. Maybe play dumb a little "I don't know if I'm in the right place..." "I'm sorry to disturb you, you may not be the right person for this....", etc. Maybe someone can get you to the right person. Again, be prepared to call A LOT

Anyway, hope all of this helps.