Heloc on a seller financed deal possible?

Question

At the end of the year i will be acquiring my 4th house. This will be a seller financed deal with family, it will be a full rehab but i will be purchasing well below market value (60K under) once i get it fully rehabbed and ready to rent am i able to get a Heloc on the property since its a seller financed deal? I am not looking to cash out refinance since i am getting such a good deal on the home being seller financed with such low interest and they are willing to finance the entire length of the loan (12 years).

Thanks for any insight

Dave Skow · Answer

@Tyler Fisher-  great  -  good luck and contact several  heloc  options   and  ask  the  other questions  noted  ...I would  recommend  contacting the smaller  to mid size  bank  and  credit unions in the  area  you are  buying for heloc options

Tyler Fisher · Answer

@Dave Skow I plan on owner occupant this property for the first year while i rehab it, and knowing that it should be a little easier to get a Heloc on a primary residence.

Thank you both for the insight @Matt Devincenzo

Dave Skow · Answer

@Tyler Fisher 1) getting a heloc  on a  rental property  will be  challenging as msot heloc  lenders  are onyl  doing them on rental properties  2)  if you locate  a lender will to do this - ask them  what  value they will use ( acquistion price or  appraised  value ) and  aski them if  the helco being behind  a family / realtive  private note  will be acceptable  ( I dont think it will  be  but  I could likely be wrong )

Matt Devincenzo · Answer

Yes financing is financing no matter where or how it is obtained. So as long as you meet the HELOC underwriting guidelines the type of first position lien isn't an issue. The only caveat to this is with a private type loans you could (in theory) agree to not allowing any subordinate financing and include that in the note...in that case the HELOC will still work since they're not responsible for ensuring you comply with your loan terms, but you risk your first position lender calling the loan. The benefit and curse of private financing is you and the lender can negotiate pretty widely on what are acceptable lending terms (within legal limits of course).

I have a friend who has purchased on several seller financed loans, he includes in all of them that he has the right of first refusal on a bonafide not sale offer. The reason why, he knows his seller's and trusts them and doesn't want to end up with a new note holder that tries to leverage their loan to obtain the property or coerce his actions somehow. It's an unlikely scenario, but at least he has a chance to protect himself before that happens by buying the note if he wants.

Heloc on a seller financed deal possible?

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