HELOC on rental property.

Member since 2018 · 61 posts · 22 votes

I have a six unit rental property which I own outright. I'd estimate the value of the property at around $250k. I'd like to open a HELOC for future investments, but my main bank doesn't allow you to use rental properties for collateral. Apparently, this is fairly common. Has this been the case for most of you? Do you have recommendations for national banks that may lend in this situation?

Thanks,

Patrick

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Todd Powell

Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes

@Partrick Strain This is pretty common now unfortunately. Back in 2005-2008 I had several HELOCS on my triplex properties with Bank of America and then the 2009 economy hit and they wiped them all out. I was happy they didn't call them, but so many investors were handing keys back to them, they made a national decision regardless of your credit and payment history. Of course, I am done with B of A for this reason, and found my local bank, Citizens Bank, to give me 70% for $225,000 on a property. Interesting point here, back when I started getting HELOCS, I was shopping B of A against Citizens Bank and both were about the same, but figured a national bank would be better. Boy was I wrong! My local bank knows my local market! Its about relationship and local properties values, and Corvallis Oregon was not affected much back in 2009 on RE values.

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Leah Stuever
Realtor · Dallas, TX · Member since 2019 · 194 posts · 164 votes
6y
Depends on location. In TX you cannot HELOC an investment property. Some other states are similar. But there are states that do allow it.
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Patrick Strain I would just start calling around to local banks and national banks with local branches. Banks do offer these, but they may have tighter restrictions on qualification standards and may have lower LTV than if it was your primary home. Call ten banks. It should take you less than an hour.
1 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
I'm with Joe. Just keep shopping around. I'm sure there's a national lender that will not have a problem with this.
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Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Patrick Strain - Keep calling banks. Ive found smaller banks who will do HELOC as a 2nd mortgage on investment properties.... Just make sure you're getting infront of the right people. Stay away from the entry level staff. Try to go right to the VP or Senior Loan Officer (assuming we're talking about some credit unions)
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Thanks for the input. I'll definitely be shopping locally. Unfortunately, I'm somewhat limited due to being in a very rural area.
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Ralph Poirier
Rental Property Investor · Wrentham, MA · Member since 2019 · 137 posts · 104 votes
6y
Consider doing a cash out refinance of the property. With rates so low it might be a better alternative as the rates on HELOC's are usually variable rate. Lock in a low rate and not have to deal with rising rates.
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Ralph Poirier:
Consider doing a cash out refinance of the property. With rates so low it might be a better alternative as the rates on HELOC's are usually variable rate. Lock in a low rate and not have to deal with rising rates.

I'd considered that, but I'm mainly interested in a line of credit for quick access to cash for short periods of time. I'm not ruling it out though.

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Todd Powell
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Partrick Strain This is pretty common now unfortunately. Back in 2005-2008 I had several HELOCS on my triplex properties with Bank of America and then the 2009 economy hit and they wiped them all out. I was happy they didn't call them, but so many investors were handing keys back to them, they made a national decision regardless of your credit and payment history. Of course, I am done with B of A for this reason, and found my local bank, Citizens Bank, to give me 70% for $225,000 on a property. Interesting point here, back when I started getting HELOCS, I was shopping B of A against Citizens Bank and both were about the same, but figured a national bank would be better. Boy was I wrong! My local bank knows my local market! Its about relationship and local properties values, and Corvallis Oregon was not affected much back in 2009 on RE values.
2 Reply
Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Todd Powell:
@Partrick Strain

This is pretty common now unfortunately. Back in 2005-2008 I had several HELOCS on my triplex properties with Bank of America and then the 2009 economy hit and they wiped them all out. I was happy they didn't call them, but so many investors were handing keys back to them, they made a national decision regardless of your credit and payment history. Of course, I am done with B of A for this reason, and found my local bank, Citizens Bank, to give me 70% for $225,000 on a property. Interesting point here, back when I started getting HELOCS, I was shopping B of A against Citizens Bank and both were about the same, but figured a national bank would be better. Boy was I wrong! My local bank knows my local market! Its about relationship and local properties values, and Corvallis Oregon was not affected much back in 2009 on RE values.

Good to know. We do have Citizens bank around here, so I'll give them a shot.
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Todd Powell
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Partrick Strain I think this Citizens Bank is just some cities in Oregon. Are you from around here?
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Todd Powell:
@Partrick Strain
I think this Citizens Bank is just some cities in Oregon. Are you from around here?

No. Upstate, NY, near Cooperstown.

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Matt J.
Investor · Tacoma, WA · Member since 2016 · 120 posts · 112 votes
6y
@Patrick Strain Might consider your local credit union. Mine did/does 75% LTV on non-owner occupied. Very common here in WA.
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Ryan Deasy
Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
6y
@Patrick Strain check out PenFed. They have a good one as long as you have like 3 rentals or less.
someone had made a post about this a while back. i remember a lady had listed about 10 banks. try searching “rental line of credit” or something like that in the BP search bar on this site. i bet you can find it.
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Kata Walters
Rental Property Investor · Palm Desert ca · Member since 2016 · 101 posts · 72 votes
6y
@Leah Stuever I ran into that problem after wanting to take a heloc out on an investment in Fort Worth but no can do ! Haha
1 Reply
Jim KalishPro Member
Real Estate Investor · Matthews, NC · Member since 2017 · 219 posts · 173 votes
6y
@Patrick Strain
Try Wells Fargo. Depending on which state you are in they have different rules. I just closed on 3 equity lines with them on my rental property. I owned 1 outright so they took a first position. I have notes on the other 2 so they took second position. They went 60% LTV.
1 Reply
Justin B.
Rental Property Investor · Franklin Lakes, NJ · Member since 2018 · 38 posts · 13 votes
6y
@Patrick Strain hey man how’s it going, I’ve got Wells Fargo to offer me this service it’s 60% LtV tho and he said the rate was a bit higher since it’s an investment property , he’s actually calling me Monday to discuss the terms . I’m in New Jersey by the way hope that helps
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Chris Lord
Rental Property Investor · Valencia, CA · Member since 2017 · 45 posts · 13 votes
6y
@Patrick Strain A San Francisco based company called figure will give you a fixed rate HELOC on investment properties. There online automated process is simple. Good luck
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Matthew Lukas
Member since 2019 · 31 posts · 15 votes
6y
Originally posted by @Chris Lord:
@Patrick Strain A San Francisco based company called figure will give you a fixed rate HELOC on investment properties. There online automated process is simple. Good luck

Just called them and they wont touch anyone with a LLC for a loan in any way. Cash out or Heloc.
0 Reply
Chris Lord
Rental Property Investor · Valencia, CA · Member since 2017 · 45 posts · 13 votes
6y
Originally posted by @Matthew Lukas:
Originally posted by @Chris Lord:
@Patrick Strain A San Francisco based company called figure will give you a fixed rate HELOC on investment properties. There online automated process is simple. Good luck

Just called them and they wont touch anyone with a LLC for a loan in any way. Cash out or Heloc.

Yeah all loans from them have to be in your personal name. Sorry I missed the part about it being a six unit building
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Jimmy S.
Investor · lehigh valley, PA · Member since 2014 · 242 posts · 23 votes
6y
fulton bank will do heloc on investment/rental properties
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Justin B.:
@Patrick Strain hey man how’s it going, I’ve got Wells Fargo to offer me this service it’s 60% LtV tho and he said the rate was a bit higher since it’s an investment property , he’s actually calling me Monday to discuss the terms . I’m in New Jersey by the way hope that helps

Nice. I'd love to hear how it works out.
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Jim Kalish:
@Patrick Strain
Try Wells Fargo. Depending on which state you are in they have different rules. I just closed on 3 equity lines with them on my rental property. I owned 1 outright so they took a first position. I have notes on the other 2 so they took second position. They went 60% LTV.

Definitely one of the places I'll look. I've had mortgages with Wells Fargo before. Since I own this building outright, I'm hoping that works in my favor.

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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Matthew Lukas:
Originally posted by @Chris Lord:
@Patrick Strain A San Francisco based company called figure will give you a fixed rate HELOC on investment properties. There online automated process is simple. Good luck

Just called them and they wont touch anyone with a LLC for a loan in any way. Cash out or Heloc.
Interesting. I run my rentals through an LLC, but the building is currently titled in my name (not my company). This is because I set up the LLC after purchasing the building, and didn't re-title the property. Maybe I should wait to do so until I've acquired the HELOC.

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Keith A.
Rental Property Investor · TX · Member since 2019 · 236 posts · 392 votes
6y
@Patrick Strain
Wells Fargo will do it in tx. HOWEVER if your rental is deeded to an LLC then don't waste your time. Been there done that. It has to be deeded to your name.
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Patrick Strain
OP
Member since 2018 · 61 posts · 22 votes
6y
Originally posted by @Keith A.:
@Patrick Strain
Wells Fargo will do it in tx. HOWEVER if your rental is deeded to an LLC then don't waste your time. Been there done that. It has to be deeded to your name.

Good info. It's currently in my name
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