Real Estate Investor · Greenacres, WA · Member since 2011 · 47 posts · 8 votes
Hi All, fairly new member here. I have searched, but have not found specifics recently that would address this issue. We are in the midst of purchasing our 3rd rental. It is a REO. We are purchasing it at 60% ARV, so am wondering if anyone regularly gets HELOC to buy something with the HELOC $?
Then start flipping the one purchased with the HELOC monies. We would keep the 3 rentals we have now for long term growth, but am thinking of moving into the flipping arena with this idea.
Real Estate Investor · Plano, TX · Member since 2011 · 16 posts · 10 votes
15y
Mary,
I have had luck with a HELOC on a non-owner occupied property at Wells Fargo. I have done my primary banking there for years. I did have to talk to probably 8-10 different mortgage gurus in various branches. It seems they have good products, but many of those in the bank just don't know how to sell them to you. I essentially interviewed bankers and told them exactly what I wanted.
I got it and did in 3 weeks, no closing costs. Mine was for $70k on a property that I purchased 9 months earlier for $55k. I then went back in and got another one. I did own the home outright and had extensive history with them including unsecured lines.
I was surprised how easy it was. Terms are good for what I am using them for. Interest only at 5.49% right now. Actually that has been my rate since i opened them.
Professional · Altoona, PA · Member since 2010 · 72 posts · 23 votes
15y
Mary,
I use a HELOC that I have on one of my rentals to purchase foreclosed properties for rehab. While I haven't flipped any, once the property is rehabbed I rent it and secure a mortgage on the property to payoff the HELOC so that I can buy my next property. I do plan to start doing flips using the HELOC in the near future.
Real Estate Investor · Greenacres, WA · Member since 2011 · 47 posts · 8 votes
15y
Ron, I have heard the Wells Fargo does HELOCs on non owner occupied, is that true? Where have you had the best luck?
And upon further review, the property we are making an offer on is actually 45% of assessd value.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
If "assessed value" means a tax assessment, don't put much stock in that number for actual values. Assessments can be all over the place and may or may not match a real value. They're for purposes of collecting taxes, not buying or selling.
Real Estate Investor · Greenacres, WA · Member since 2011 · 47 posts · 8 votes
15y
Comps in the area based on the last 90 days puts it at probably 55% of real value. Still wondering the best HELOC company with values like that. Suggestions?
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
15y
I have also used a HELOC in the past, but it is a risky way to acquire properties. If you make a mistake on value, you will end up with one property you paid too much for and put the property you pulled the HELOC out of at risk.
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
15y
As far as nat'l banks, I've found US Bank pretty aggressive on HELOCs. Are you referring to getting one on the investment property, or your primary? Around here, US Bank will go to 90% LTV on your primary (most banks cap at 80% these days.). Not sure about any nat'l banks that will do HELOCs on rental property. Certainly, some local banks will do these, but not nearly as many as would a few years ago!
For flipping, there are likely local banks in your area that will finance your purchase and rehab expenses up to 75-80% of a "subject to" appraisal (essentially ARV), usually at very reasonable rates and costs.
Otherwise, why not cash-out refi as much long-term fixed rate money as you can at these millenial low rates, on both your rentals and your primary? Of course, 6-12 mth title seasoning on the rentals will be necessary to refinance conventionally.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
15y
Originally posted by Bienes Raices:
Originally posted by David Beard:
Not sure about any nat'l banks that will do HELOCs on rental property. .
TD Bank is doing them--I dont't know if they offer it nationally but they do service a lot of states.
Well to follow up I received my rejection for a HELOC for my investment property from TD Bank today. :cry: I wasn't too shocked but I was hoping against hope.
At least someone is doing the investment HELOCs again--when I called around 2 years ago no one would touch them. Maybe in another year things will loosen up more?
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
15y
Mary,
Not a bad plan, it is cheap money, but why would you want to risk your personal residence for investment purposes?
I do think that it is a good plan to do one flip and use the proceeds to keep doin it again and again.
Perhaps consider private capital, I just like to keep my business and personal live very seperate. Just my 2 cents. :mrgreen:
P.S. I am just ignorong the HELOC on investment properties because they are so tough to get, unless it is in 1st position and a very low LTV and for far less than you origionally paid, unless you have a lot of seasoning.
(I know banks promise more, but it is like pulling you teeth out through your anus to get it closed! LOL!)
Real Estate Investor · College Station, TX · Member since 2011 · 105 posts · 18 votes
15y
I have found the best bet for pulling equity out of your rentals is working with a small local bank. Once you can get a good longterm relationship built it will almost get to where you can make a phone call and be closing in two weeks. Of course the down side is you will be doing 5/1 loans.
For a young person the leverage can make the difference between having to sit on the sidelines for years at a time or continueing to build wealth. There is obvious increased risk which gives you even more reason to know your market and purchase at deep discounts.
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
15y
I used heloc's to flip properties in the past. It save a ton of acquisition costs (bank, title, appraisal, recording, etc.) At one time I had 8 checkbooks - a heloc on my home and 7 rentals. They were all either frozen or cancelled in early 2008(?). Fortunately, I saw this coming and maxed-out 4 of them. I've used that $$$ for downpayments on the reo's and shorts I've bought over the past 30 months. I am presently doing a big cash-out refi on my residence. This is cheap money. I'm going to investigate TD. I really liked having those checkbooks. Heloc's are a great way to buy flips and also to monetize all that equity. Is like having a big fat savings account and you only pay interest when you use the money.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
15y
Cheryl and Bienes, I've used TD Bank for my last 3 HELOCs and just applied for a 4th. I use my local branch here in NJ for the purchases in FL. I can basically apply on the phone or by fax to the branch as I have a very good relationship with them.
Current rate for an 80% LTV on a FL condo is 3.75%, 20 year term. I also pull out most of the money when the HELOC closes to buy the next property, then do the HELOC process again. I also have a HELOC on my primary residence which I used to buy my 2nd rental. My first rental has a conventional mortgage with Chase.
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
15y
Hey Aly! Thanks. I'm making some calls on Monday. I sleep very well at night when I have 7 figures in checkbooks. Plus, if you are flipping, you can't beat the transaction costs. You pay cash with a heloc check.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
15y
You've got that right Cheryl! I have 4 HELOC checkbooks, 3 with TD Bank and one with a credit union. However, the credit union was the first HELOC (2nd rental) and for some reason 3 years ago I got scared that the rate would go up, so I converted it to a fixed mortgage. There is a few thousand left in that HELOC account that I can use, but upon the conversion, that HELOC is effectively closed.
I have several business checking accounts with TD as well, and I would suggest that anyone looking to invest to become very friendly with the staff at the bank. Give them all or most of your business, heck, I've bought them boxes of chocolates. When they appreciate your business, your business gets much easier.
Real Estate Investor · Greenacres, WA · Member since 2011 · 47 posts · 8 votes
15y
Is TD Bank only doing business on the East Coast? My bank couldnt give me a straight answer on seasoning, as I was also thinking of a straight refi, cash out, so that it may be less risky.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
15y
Originally posted by Mary Spalding:
Is TD Bank only doing business on the East Coast? My bank couldnt give me a straight answer on seasoning, as I was also thinking of a straight refi, cash out, so that it may be less risky.
From Wikipedia here is where they do business in the US (I think this is on their website too, in the dropdown list). I would call them to be certain, though.
Connecticut
Delaware
Florida
Maine
Maryland
Massachusetts
New Jersey
New Hampshire
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Vermont
Virginia
Washington, DC
Real Estate Investor · Plano, TX · Member since 2011 · 16 posts · 10 votes
15y
Mary,
I have had luck with a HELOC on a non-owner occupied property at Wells Fargo. I have done my primary banking there for years. I did have to talk to probably 8-10 different mortgage gurus in various branches. It seems they have good products, but many of those in the bank just don't know how to sell them to you. I essentially interviewed bankers and told them exactly what I wanted.
I got it and did in 3 weeks, no closing costs. Mine was for $70k on a property that I purchased 9 months earlier for $55k. I then went back in and got another one. I did own the home outright and had extensive history with them including unsecured lines.
I was surprised how easy it was. Terms are good for what I am using them for. Interest only at 5.49% right now. Actually that has been my rate since i opened them.
Real Estate Investor · Plano, TX · Member since 2011 · 16 posts · 10 votes
15y
70%. I could not tell how they were identlfying the value. They did not do an appraisal..maybe just a drive by appraisal. They asked me what I paid for it. I told them I want you to loan off what its worth, not what I paid for it. I showed them my grossly overstated tax value at $100k. I then told them I wanted $75k. They said we can go $70k. I said ok.
1 week after my HELOC was funded - I challenged my property taxes and reduced my tax assessed value by almost $40k.