Pulling Equity on investment property

[James N. Jones III]

So I have a new scenario brewing. I have an investment property that I want to pull the equity out on. I am running into some roadblocks. I see that most mortgage companies don’t do heloc’s on investment properties and if they do they require a higher credit score and can only pull 70-75% of the equity. What other options do I have? Can I take a second mortgage on an investment property? Let me know what you think. I’m looking to get 30-35k and use as down payment on a new property. Thanks a ton! 

[Alioune Camara]

James, you have 4 real options:

1. Cash-out refi – Most common. Expect 70–75% LTV on investment property.

2. Local bank/credit union HELOC – Big banks won't, small banks often will.

3. Second mortgage (closed-end 2nd) – Yes, possible. Higher rate, but works for $30–35k.

4. DSCR cash-out loan – Based on rental income, not your personal DTI.

Before pulling equity, make sure the new deal’s return clearly beats the cost of the borrowed money — otherwise you’re just increasing risk without improving cash flow.