Jersey City, NJ · Member since 2012 · 127 posts · 10 votes
Can your equity partner do a HELOC on his share of your property? Say he has a 70% share, and the value of the house goes up to 200k, can he get a HELOC for 140k?
Does it matter if you split profits 50/50 - I assume no because the equity position is what matters right?
Also how does the HELOC lender verify that you have 70% equity?
Matt Liu This is probably something that you need to consult an attorney on. There's many variables, such as state real estate law, how do you hold title, what agreements do the two of you have, etc.
I won't say this is impossible, but you have a lot of stuff working against you.
Getting a HELOC on an investment property is very difficult. Now you're wanting to get it on a 70% interest in an investment property. That makes it very painful for the lender to foreclose.
Also realize that all lenders have some LTV limit. Not sure what you might find, but I am sure its less than 100%. For a HELOC, this will be a combined LTV that includes the first. At a guess, I'd say 80% is the highest anyone would go. If you owe $400K on a property worth $500K, you start at 80%. Now it goes up to $700K in value. Even after five years, you're still going to owe close to $400K. (Not that I expect 40% appreciation on anything in the next five years.) 80% of $700K is $540K. Less the $400 first, you have $140K you could take, not $200K.
Read Steve's post again and again until a light goes off....LOL. No, he can't, you'll need to sign the mortgage as well. One to buy, two to sell and two to borrow. If it's in a business entity and you want a loan, the person authorized to encumber the property in the company signs and the minutes or partnership agreements need to show such approval to act in that matter. Good luck...