Loan against rental property

19 Replies

I have a property that I own free and clear worth around 150,000 I have been told by the bank that I cannot take an equity loan on the property because I don't live there. Does anyone know how I can get money against it to buy more? I live in New Orleans

This post may help you a bit Walter. Its not your exact situation but some of the same factors could help. Since you don't have a mortgage anymore that may be why the bank wont help but like this posts says talk to a home based bank "they are more flexible" and they should give you a line of credit on the home.

https://www.biggerpockets.com/forums/50/topics/72178-heloc-against-rental-property

@Walter Ocampo - Lines of credit are difficult to find with NOO properties. But you should have no problem doing a cash out refi as long as you have 4 financed properties or less.

Originally posted by @Walter Ocampo :

I have a property that I own free and clear worth around 150,000 I have been told by the bank that I cannot take an equity loan on the property because I don't live there. Does anyone know how I can get money against it to buy more? I live in New Orleans

I live in LA also am down some rentals out of state free and clear. I contacted multiple LA banks and out of state banks to Try and get a HELOC and couldn't find any takers. Some were willing to do a commercial refi but at a higher rate with a variable mortgage.

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You will not get SFR loans (LOC, Refi) unless you are resident.

It's a rental (aka business) property and you will either take options noted above or need a commercial loan (just like MFU 5+ properties).

The loan rate contributes very little to the mortgage payments (run different rates thru a payment calculator), so don't go crazy on the rate.

However, all commercial loans are ARMs and get reevaluated periodically, and that may be a deal breaker.  My MFU arm changes twice a year, but not by big numbers, ( never seen a $10 change yet).

Not sure about all the either advice but I have a client that is on bp that lives in Cali and has 6 residential homes in his name he purchased in cash and refi them out and has a convention loan on.

Originally posted by @Jovanny Smith :

According to the law, you can get a loan only against the property where you live.

You are wrong. How do you suppose folks get a mortgage loan for investment properties?

For someone working for a financial institution, you should know your stuff. And certainly not say "according to the law", if you are not sure.

Also something to consider if you are over the Fannie/Freddie limits for a cash out refi that @Upen Patel Patel mentioned, you could try a a portfolio lender. Or just go to a mortgage broker who does portfolio loans. I think Upen does those as well.

Originally posted by @Walter Ocampo :

I have a property that I own free and clear worth around 150,000 I have been told by the bank that I cannot take an equity loan on the property because I don't live there. Does anyone know how I can get money against it to buy more? I live in New Orleans

 you are talking to the wrong bank. you need to find a local credit union, small bank and a smart guy in charge of business development. sit down talk ...and you should soon release 110K in the form of equity line of credit. you pay interest only when you draw, otherwise the loan sits dormant and money is always available. ohhh in case you get sued on lose ..record of deeds show almost no equity in the house ;-) since the credit line is recorded as a mortgage. 

This type of loan is generally available to individuals who own a property that has been rented out to blue chip companies, multinational companies and public sector companies.

Originally posted by @Max Matrin :

This type of loan is generally available to individuals who own a property that has been rented out to blue chip companies, multinational companies and public sector companies.

 it does not matter who the tenant is. what matters is the individual at the bank (generally some sort of VP) who you talk to. it has to be a business person not a pencil pusher locked up in his cozy 9-5 safe corporate box.

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