HELOC options using investment property owned together with Father

Newark, New Jersey
Creative Real Estate Financing
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HELOC options using investment property owned together with Father

Frank C.
Member since 2023 · 2 posts · 0 votes

Hello everyone,

My name is Frank, I am looking for a creative way to find financing for a down payment to purchase a rental property to hopefully grow my portfolio. I currently own 1 two family house in Perth Amboy, NJ that I purchased many years ago together with my father. The house is currently occupied by my Parents with the 2nd apartment rented. I now live in a single family home with my wife and kids. I'm looking open a HELOC on the two famiy house and hopefully use that for a down payment on another multi family house. Facts about the two family is the Deed is under me and my Father and after a ReFi the mortgage is now only under my fathers name.

My plan is to get a HELOC under the two family house and have the HELOC only under my name.

Dose anyone know if this is possible under my situation and if so does anyone recommend any specific bank or lender to accomplish this plan?

I hope I explained things correctly, I didn't handle my first investment the best of ways and I'm trying to get started on doing it the right way now going forward and feel like the HELOC is my only option to get started.

I thank you guys in advance for your help and advice!

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  • Sanat Bhandari
    Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes
    3y

    @Frank C. Talk to a local bank/credit union explaining this situation. They can give you a CLOC (commercial line of credit/not a HELOC since it's not a primary residence) against your guys' equity in the duplex.

    Generally, on an investment property, leverage is limited up to 75% CLTV (vs up to 100% CLTV on primary residences/HELOCs) and in some cases, can go up to 80% CLTV (I got such a product back when rates were in the 3's and market was much hotter)

    Your dad would most likely have to be a cosigner on the HELOC docs since the mortgage is under his name. A way around this would be to refinance again to get his name off the loan and then you can get the CLOC in your/your single-member LLC's name

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  • Frank C.
    OP
    Member since 2023 · 2 posts · 0 votes
    3y

    Hey Sanat, thank you so much for the advice I have never heard of a CLOC so I have been reaching out to a few banks to see if I can apply. So far I reached out to two local banks and they require the house to be a 5 plex or more for the CLOC. I have two more banks I will be reaching out to tomorrow, hopefully I get more positive answers. I'm going to keep trying this for awhile because I don't want to do a refi again just yet with the rates being so high. Thank you again for your time and responding to my post.

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