Best Way to Find a HELOC?

Question

Hi all, I've stumbled into a BRRRR situation, and I'm looking to tap into my property's equity to fund my next investment. I currently owe $277,000 on 4-plex worth approx. $800,000 after 10 years of appreciation, forced and market-driven, in Kansas City, MO.

Ideally, I'd like to use a HELOC to fund my next (more intentional) BRRRR. What's the best way to find a HELOC with favorable terms? Local? Big national establishment (PedFed)? Scan the market for hot rates and deals?

Any and all advice is appreciated.

Andrew Postell · Answer

@Michael Tripp if this is your primary home then just about ANY bank can lend you a HELOC.  Sorry for any confusion here.  If it's not your primary home it's more challenging.

Andrew Postell · Answer

@AJ Vanderhorst I agree with the above post.  Really hard to even find this product.  I heard PenFed offers it but they seem to also have a lot of restrictions to their product.  Maybe try posting this in the Missouri forum?  Assuming the property is in Missouri.  But the state forums here on Bigger Pockets do have local people who participate pretty actively.  They might be able to help.  I think I do know of 1 lender that can lend on a property of that nature in MO....feel free to PM me if you are interested.  Thanks!

Michael T. · Answer

@AJ Vanderhorst as Jaysen and Andrew mentioned there are a few lenders that will do it such as PenFed, however, they do have restrictions.  To my knowledge I believe you can only have a maximum of three current mortgages or three investment properties to your name to qualify for the HELOC program.

As @Andrew Postell mentioned definitely ask a few local lenders in your current market and they maybe able to give better guidance.

If this 4-plex is your personal residence right now obviously the best thing to do is google "introductory HELOC" in your location and there should be numerous results from credit unions and a few banks that offer a very favorable introductory rate and terms.

Laura Williams · Answer

@AJ Vanderhorst If this 4 plex is your primary home then it shouldn’t be too hard to go to a traditional lender and get a HELOC.

If this property is an investment property and held in an LLC you should be able to get a business line of credit with the house as collateral. It’s like a heloc but they call it something different. And usually banks don’t want you to keep a large balance for more than a year or 2 on these lines of credit without seeing you pay it off. Whereas a traditional heloc you can take 30 years to pay off.

There’s a lot of smaller local banks in KC that offer this product you just have to talk to someone in the commercial department.

Harjeet Bhatti · Answer

@AJ Vanderhorst Have you tried to reach out to your current lender for HELOC?

Jaysen Medhurst · Answer

@AJ Vanderhorst, the challenge is finding a lender to do a HELOC on an investment property, most do not. You mentioned PenFed, but it's definitely worth scouring your local banks / credit unions. Better to use this opportunity to establish a relationship.

AJ Vanderhorst · Answer

Thanks for the advice, all! I appreciate the quick crash course. I wasn't getting notifications for a couple days, so sorry for my delay in responding. This 4-plex is my first property/house hack, so it's my primary residence—I should've spelled that out. It sounds like my best bet will be to look around for the best introductory HELOC rate I can find.

If I use a HELOC down the road on an investment property, apparently I'll have my work cut out for me. Of course, that would be a good bridge to have to cross...

Best Way to Find a HELOC?

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