LOC on San Antonio and Austin Investment Properties (Texas)

5 Replies

I have two duplexes, and have more than 50% equity in both of them. Each property is worth about 200K. In addition, I have about 60K (and growing) in personal cash set aside to invest. Because of this strong financial position and because I'm still new to the real estate business and learning, I'd like to pursue my first true BRRRR deal funded exclusively with my own money. I want to improve my system to the point where I will be able to pursue private money with confidence that I can earn my investors good returns It all starts with doing some laps with some of my own hard earned cash and equity. I have considered cash out refinances of the properties, but do not want to drop the cashflow on either of them by increasing their mortgages. They are both home runs in terms of cash flow. It doesn't make sense to give that up if it can be avoided. I know that it has been asked here before, but I'm looking for any suggestions on where to obtain a Line of Credit on these two properties. Texas law seems to be a little uptight about the whole concept, and all of the banks (local and national) that I have called seem to think I'm looking for a HELOC, and then tell me "no" when they understand that I'm actually looking for a line of credit collateralized by one or two investment properties. I have a goal purchasing another property by 2-1-20 and this piece of the puzzle is holding me up. Thanks for your suggestions.



Giving this a bump to see if anyone has any ideas.  Thanks in advance.  I have a list of about 45 local banks that I'm working though.  I'll report back if I have any success.  

@Ben Wilde thanks for the bump here. Bigger Pockets does have a pretty active Texas forum and this is one of the more common questions we get there. Feel free to follow that forum as it has some pretty good locals that know a thing or two. Usually when I field this answer out in the general forums it about finding this in ANY state so I'll answer it for Texas and for everyone else just in case it gets researched.

1. Texas - Cash out loans of any type are pretty challenging here in Texas. Because of this many lenders won't do these loans at all. Finding a lender that does investment property "Lines of Credit" is hard in any state...but here it's even harder. I know 3 that write them locally in DFW...and none will do it state wide. 

2. For everyone else....a small, local lender will be your HIGHEST probability of success when trying to find "Line of Credit" lenders on investment properties. The unfortunate thing here is that investment properties foreclose at a higher rate than primary homes so many banks just don't want the exposure to this. But it is 100% possible to find but you have to put in the time or at least know someone that ALREADY has the connection. Here's my 3 suggestions:

  1. Post in the Bigger Pockets STATE forum that you are looking in. There are usually some good, local investors that monitor those forums. Maybe they already have a suggestion or recommendation for you? Certainly try there.
  2. Visit your local REI groups. There are many groups that meet across the country. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.
  3. Facebook - Ben, this might be more of what you will need to do since you can visit a local club - surprisingly Facebook has some good group pages for Real Estate Investing Groups.  I might try to suggest to search for "San Antonio Real Estate Investors" or something to that effect to see if you can find some good groups to get connected.  @Betty Cruz might be a good resource here if she is still active on Bigger Pockets.
  4. Calling - and then there's this option. Which is what I had to do. I had to call about 200 lenders (no exaggeration) to learn of 4 lenders who did this and I have some tips. First, when calling banks target the smallest most community based banks you can first. If you have never heard of them, and they have one location - that's a good candidate. No big, national, publicly traded banks will do this loan type. Second, try to ask for "LINES OF CREDIT" instead of "HELOC". I know it sounds like I'm splitting hairs but some banks write HELOCs in their residential department....which won't write Investment Properties. And that residential department will often not speak to the commercial department. So they'll just say "sorry, we don't do it"....not even knowing that they really do! So if you ask for a "line of credit on an investment property" that should get you to the COMMERCIAL division. That's the section of the bank we want. Now, most of these smaller banks may only have 12 employees or so. So don't get frustrated if they don't return your call or aren't in the office. Just call back and be friendly. Maybe play dumb a little "I don't know if I'm in the right place..." "I'm sorry to disturb you, you may not be the right person for this....", etc. Maybe someone can get you to the right person. Again, be prepared to call A LOT,

*WHEW*  I know that is a lot but feel free to ask anything additional if you need. Thanks!

@Andrew Postell

Great advice. I’ve kind of stumbled into an understanding of the commercial vs residential loan departments after several calls. Many of the folks that took my call heard me ask for “ a line of credit on an investment property” and say “O, we don’t do helocs on non owner occupied properties”.

Do you think it’s appropriate to ask for the commercial loan department first, and then use the following wording?

“I’m looking for a line of credit that is collateralized by one or more of my investment properties.”

Originally posted by @Ben Wilde :

Giving this a bump to see if anyone has any ideas.  Thanks in advance.  I have a list of about 45 local banks that I'm working though.  I'll report back if I have any success.  

Do they have to be local banks?