Investor · Cleveland, OH · Member since 2011 · 603 posts · 130 votes
After calling 33 small banks I have come to the realization I am not going to get a HELOC on a rental property in the second position.
I know Huntington/Penfed/Navyfed/TDbank will do them but due to various reasons including being out of state, too many properties, properties in LLC - I am ruled out of those lenders. Refinancing is also out the question.
I have 2 properties with 150K in appraised equity and I am looking for a loan or HELOC around 80K. Is there any other way to barrow against this equity?
When you take out a HELOC, your cash flow is going to get affected. Some part of the $180 will have to go towards paying off the HELOC. Now, you can choose to only pay interest for a while, but at some point the principal has to be paid up as well. Except for the higher cost to refinance, I'm not seeing any difference with a HELOC. Also, pretty much everyone is expecting the rates to go up now, which means you will have a higher risk with a HELOC as compared to a FIXED rate mortgage.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Adam Craig if you are looking for any loan on a rental property in the 2nd position it will be extremely challenging. Your only option would be to find a portfolio loan from a bank and I have never heard of a lender allowing a cash out 2nd lien on an investment property. Is there some reason as to why you would not refinance your first loan into a cash out loan?
@Adam Craig if you are looking for any loan on a rental property in the 2nd position it will be extremely challenging. Your only option would be to find a portfolio loan from a bank and I have never heard of a lender allowing a cash out 2nd lien on an investment property. Is there some reason as to why you would not refinance your first loan into a cash out loan?
Believe it or not Huntington offers them in the second position. I was ruled out because its held in a LLC though.
I dont want to refinance because I have already refinanced to the point where my cash flow numbers still work. Right now I have only $180 spread each month and don't want to lose money monthly on any of my holdings. My balance on the house is 80K and it appraised for 166K - I might end up selling it though I would love to cash in in 10 years instead of now.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Adam Craig wow, that's great that you even found a bank to do it. I wish we had that bank down here. I see why you would want a LOC so that you would only use it if you needed it to keep your cash flow positive. Is that normal for you to have a $180 cash flow on properties in Ohio with 50% LTV? That would seem to make it difficult for anyone to invest. Putting down 35% would be a negative cash flow?
Investor · Cleveland, OH · Member since 2011 · 603 posts · 130 votes
9y
I bought this house for 74K - put about 28K into it and it appraised for 166K.
This was my best investment in terms of equity gain and would have been a great flip but I rarely flip. So I am refinanced into a 86K loan and my payment + tax and insurance only leaves me with 180 cash flow.
Program Manager / Investor · Charlotte, NC · Member since 2016 · 77 posts · 39 votes
9y
You could do a title 1 renovation loan. You don't need equity in the home to do this and can typically borrow up to 25K. Most banks will match another 25K if you need the money.
You will need to provide proof that you are going to do repairs and they will perform an inspection once complete.
When you take out a HELOC, your cash flow is going to get affected. Some part of the $180 will have to go towards paying off the HELOC. Now, you can choose to only pay interest for a while, but at some point the principal has to be paid up as well. Except for the higher cost to refinance, I'm not seeing any difference with a HELOC. Also, pretty much everyone is expecting the rates to go up now, which means you will have a higher risk with a HELOC as compared to a FIXED rate mortgage.
When you take out a HELOC, your cash flow is going to get affected. Some part of the $180 will have to go towards paying off the HELOC. Now, you can choose to only pay interest for a while, but at some point the principal has to be paid up as well. Except for the higher cost to refinance, I'm not seeing any difference with a HELOC. Also, pretty much everyone is expecting the rates to go up now, which means you will have a higher risk with a HELOC as compared to a FIXED rate mortgage.
Not sure why I never looked at it like that but your right. I guess I will look into refinancing, thanks