LOC on primary to finance investment?

3 Replies

Looking to take out a LOC on our primary residence to invest in a multi-unit. The equity in the home has been created by renovations that currently do not match what is listed on the MLS...if you get what I'm sayin'. We're trying not to advertise the upgrades we've done because it will skyrocket our taxes, but we'd also like to tap into the added value. Will this be a problem with an appraiser or the bank? Or are we ok because it's just a LOC and not a sale/re-fi?

We also have a good bit of equity in a an investment property up north, but we'd have to do a cash-out re-fi on that property and it has already been re-fi'd twice in the past 6 years. It's a cash cow on a 15 year note with a great interest rate so we'd really like to leave it alone if possible. Are we making the right decision by trying to utilizing the equity in our primary or going about this all wrong?

Thanks in advance for your input!

@Lori Freda you are leaving out some pretty crucial information like what state the property is in. At least in Illinois, the HELOC will not trigger a tax raise. I love the HELOC versus doing a refi on the investment property. The HELOC has much lower/no costs to do while the cash out refi has a decent amount of closing costs you have to pay. I personally have done both strategies at different times, and I like both strategies quite a bit.

@John Warren Thanks for the reply! We’re in RI. There were some upgrades done that were not permitted and we are trying to keep it that way for now. Increasing the property value would cost us more in taxes than paying the closing costs for a cash-out re-if on the other property. 

If we can do a HELOC on our primary that would be preferable.

Have you seen any banks willing to do HELOC's on investment properties? Tried that a few years ago and all we called were still refusing to even consider it

@Lori Freda I think most small banks will do HELOCs on investment properties, if you have them paid off. That is normally the issue for most of the investors I know! I would look into doing a refinance on an investment property if you have debt on it.