Equity Loan on Investment Property

3 Replies

I have several SFR properties in Johnson County Kansas (Suburban Kansas City). These properties are financed on 30 year fixed rate mortgages with rates that are below what I can get today with refinancing. I would like to be able to use the equity in some of these properties to buy additional properties but I don't want to refinance the properties that I currently own and end up with a higher rate. I would like to take an equity loan against properties that I have. This would keep the main loan at a low interest rate and still give me the cash that I need for additional down payments. This issue that I'm finding is that when I talk to banks, they don't want to do an equity loan on investment property (they all just want to refinance and hold the 1st lien on the property). Does anyone know of lenders, local in Kansas City or not, that will do an equity loan on investment property? (I understand that the first mortgage and equity loan combined likely won't be allowed to exceed 75% LTV) Thanks!

Hi @Alden Roseman

I appreciate you looking at leveraging your equity to acquire more investments! That's a great idea! 

What rate would you be willing to pay on the equity loan? Even if you were willing to pay a premium, I am not sure how many banks would be interested in 2nd position on investment property.  (as you have discovered)  You also have to consider what the cost difference will be b/t the rate you are willing to pay on a 2nd vs. the cost of a rate increase on the 1st loan. 

Have you considered asking if the lender(s) will give you a better REFI rate/terms if you were willing to "package"  your properties (some or all) into a "portfolio" type loan?   I know one of our investors did this with a smaller bank (I think local) and was pleased with the results.

Paul-I understand there are many options to consider and a portfolio loan is one of those.  At this time, what would work best for me is being able to do an equity loan on individual properties.  I'm hoping there is someone on BP that has found a lender who will do this.

Pennfed does Line of credit on investment properties.  The catch is that it's a variable rate for 12 yrs.  There were other options I believe but not as attractive.  Goes without saying that you need to have equity.  I believe they go up to 65% ltv but ask them.  Best of luck!!

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