Heloc for investment properties

10 Replies

Hello BP insiders!

I am having a problem getting a non owner occupied Heloc approved because I have 4 mortgages. Has anyone ran into that problem and managed to pull it off?

@Jean-pierre Martinez

Yeah same here I tried PenFed and they said I couldn’t do it right when my application got to processing. I tried TD bank right after, and they said the same thing only they added that I may want to consult a real estate attorney to see how it could be done.

@Khemaro N. you need a local lender for this type of a "Line of Credit". 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. 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.

Hope this helps!

@Brian Gerlach They said no because I have four mortgages. They can do a primary Heloc for me but not an investment property Heloc. HOWEVER, I was able to find a bank that was willing to do it. The only catch is that they would have to be in the first Lien position in order for me to get the Investment property Heloc, so I would have to refinance with them. Unfortunately, my current interest rates is much lower than what they could offer me so I declined.

@Khemaro N. Mind sharing the bank you were able to get to agree? I'm in a similar boat, trying to open a HELOC off one investment property to use to help fund other investments, but also having a hard time. The option to refi so that lender would be in first lien position might be something I could actually consider since rates are so low now. Looks like I should give Pen Fed a try too.

@Khemaro N.

This is still possible, but you just need the right lender.  Terms may not be as great, but if the equity is there, this IS still an option.  PM me for some suggestions.