My dad flipped a house over the summer that we have not yet sold. Our idea was to add my name to the title, take out a HELOC under my name, use that money to pay him for the house, and then I would rent it out and make monthly payments on the HELOC. I've spoken to one lender, and she said a HELOC can't be done on an investment property. This makes no sense to me. He owns the home free and clear - no mortgage, liens, or anything else. I don't understand how you can have equity in a home that you own and be told, "This money is yours, but there's no way for you to access it, sorry." What are our other options?
It depends on the lender, call around and find one that will give a heloc. You will probably pay higher fees but some lenders will do it. Focus on local lenders
HI Nicole I was able to open one with TD bank over the summer. I have a long term relationship with them, but may be worth giving them a call. I also refinanced an investment property with them this year at 5%. If you have a decent LTV this may be a better option. We are going to have a few rate hikes over the next few years and having fixed money at a reasonable rate will feel more valuable than a HELOC in the not to distant feature.
Hi @Nicole Heasley . Most lenders won't do HELOCs on investment properties but there are some that do. When one bank tells you that they don't do them, all that means is that particular bank doesn't do them. A bit like Home Depot telling you they don't have any hammers. Doesn't mean you can't get a hammer...it just means that Home Depot doesn't have them and you need to go somewhere else.
It may take a few phone calls, but you'll eventually find a lender who can help you. And here's some questions to ask when calling around: What You Need to Know When Shopping for a HELOC.
Thank you all for your insight! We're moving forward; we know of at least 1 bank in the area that has been willing to do a HELOC on investment properties for someone else, and I plan to gather a list of lenders, banks, and credit unions to call next week.
Here are my latest questions, which I've posted in another forum here: https://www.biggerpockets.com/forums/51/topics/529...
1) Will the bank care that my name is not yet on the title? Should we add my name before contacting these financial institutions?
2) If we add my name to the title and can't get the HELOC and the house is sold, how bad will that screw me over come tax time?
Hey Nicole, yeah, I literally just did this earlier this week. I asked other local investors about local banks they recommended, and I googled local (my city) lenders. This gave me a list of banks, lenders and credit unions. I just started calling them up and asking about terms and closing costs. Took about 20 minutes total. At the end, I had a list of 3 lenders who would give me a heloc on my rental at varying terms/closing costs. Also incase they dont mention an apprasial cost, ask. If they require it, it's about 800, at least in my area.
PS if you try googling and after calling you come up short, understand that by googling your probably only picking out about 50% of lenders in your local area. Change up your search, ask realestate agents for local lenders, ask each bank you called who they think might be able to help you( many of the people have worked for other lending institutions and can push you in the right direction)
Hope this helps good luck
@William Golden It's a huge help. Thanks so much! I am attending my first BP meetup on Thursday. The house is about an hour and a half away from where I live/my meetup, but I'm very eager to talk to other local investors.