I have not been able to find a bank that can do a HELOC on my rental properties (Utah and OH) these days. I would appreciate any help here. Thanks in advance.
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
4y
HELOCs are a second lien, so many lenders avoid offering them as there is no collateral. The best way to do this is to go to the bank that you currently have your mortgage with. They are much more likely to offer a line of credit on the equity you have. Usually they will lend up to whatever they initially offered in the mortgage (called Loan to Value or LTV). If you put 20% down then they financed 80% and the LTV is 80%. They will want to do another appraisal and then will give you a line of credit up to whatever keeps the 20% equity. If you have little equity than of course, you can't get a line of credit. Since they are rental properties, the product is usually called a business line of credit or a commercial line of credit. Ask to speak with your commercial banker first, then ask for one of these products.
Real Estate Investor · Matthews, NC · Member since 2017 · 219 posts · 173 votes
4y
Since you are asking about a HELOC I'm assuming the property is in your name. If its in an LLC then its a slightly different yp of loan. IN your name its based on credit score and your current debt to income ratio. Basically its mostly about your ability to repay personally. If the property is in an LLC then the loan is a commercial loan and is based on something called Debt Service Coverage Ratio or DSCR. Its more about the net operating income the property generates. It needs to ne anywhere from 100% to 125% of the debt. Of course most still want to see your credit score.
I've called around 100 lenders a few times over the last year or so. As of right now I'm aware of only 1 that still is doing HELOCs on investment property held in personal name. That's TD Bank. They loan on 75% LTV and 43% DTI. And they have a limit on the number of properties you can currently own. I think its 1 primary, 1 secondary and two investment properties. 1099 will make it tougher but not impossible. But you should check with one of their loan officers. BP won't let me post contact info for my guy, I tried. His name is Matt Paterno. If you want his contact info just PM me. Good luck.