Heloc on Vacation Rental Property

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Heloc on Vacation Rental Property

Ashley Pohlman
Real Estate Agent · Boston, MA · Member since 2017 · 10 posts · 1 vote

We have been trying to get a home equity line of credit on our vacation rental property in Cape Cod. This is currently the only property we own and we rent it out for approximately 14 weeks out of the year. It is considered an investment property on our tax return. We have tried multiple banks but continue to get denied because they won’t lend on investment properties. Does anyone know of a bank we could contact that is open to lending on rental properties?

 Some more information… 

We just had an appraisal done through DCU  and it came back at $460,000. Our mortgage is currently $312,000. We would like to take out as much as possible. Any advice or guidance would be greatly appreciated. Thank you in advance! 

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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
7y

The first 4 (below) I’ve confirmed. The others are from BP members.

Trustco

US Bank

TD Bank

PenFed

Union Bank, specializes in noo HELOC

Arvest Bank

Utah: Americafirst 80% LTV on noo

First Florida Credit Union(Jacksonville area)

HELOC in Texas from Hurst Lending and Insurance

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  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    You may want to look into a cash-out refinance, if you can't get a HELOC.

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y

    Try a smaller regional bank. They typically have more flexibility and less red tape.

    Have you tried the bank that has the first mortgage?

    1Reply
  • Jim Adrian
    Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes
    8y

    @Ashley Pohlman

    You may only see 60%-70% Loan To Value (LTV) ratio on an investment property. It looks like your 67% = 312,000/460,000. You will need a bank that works off 70% ltv which may gain you a ~10k heloc. Large banks like Wells Fargo require 60% ltv which is why you may have been declined.

    https://www.calcxml.com/calculators/how-much-can-i-borrow-from-my-home-equity-heloc?skn=#results

    https://www.bankofamerica.com/mortgage/learn/how-to-calculate-home-equity/

    1Reply
  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    I've done cash out refi's on mine using regional banks. 70% LTV. As @Jim Adrian mentioned, that doesn’t leave you a lot of skin in the game to pull out. 

    0Reply
  • John D.
    Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    8y

    Have you considered calling it a second/vacation home? So long as you don't need the properties rent in your DTI calculation, that may be a good option.

    0Reply
  • Bruno C.Pro Member
    Rental Property Investor · Providence, RI · Member since 2013 · 120 posts · 41 votes
    8y

    @Ashley Pohlman I've got a few banks I'ved used in the past. Unify FCU gave me a HELOC on my investment property in Boston a few years back, and you may be able to get the same deal. PM me and I can give you the contact info.

    If your property is in a LLC, you can work with Freedom National Bank for a commercial LOC using that as collateral. Again, if this is of interest, PM me.

    0Reply
  • Dan K.
    Rental Property Investor · Boston, MA · Member since 2012 · 257 posts · 139 votes
    8y

    @Ashley Pohlman

    You may have to do a 70 or 75% LTV, especially if you want to avoid PMI; however, you should be able to get a cash out refinance. If you PM me I'm happy to put you in touch with a small regional bank that does work on the Cape as well as a local mortgage broker for another bank. I think either one would be able to help you with unlocking some of that equity.

    Furthermore, I don't think you need to classify it as an "investment property." Instead, it is a vacation home that you rent out for part of the year. You should be able to have it qualify as a second home in the eyes of many banks.

    0Reply
  • Andrew Narsi
    Lender · Turlock, CA · Member since 2015 · 46 posts · 33 votes
    7y

    PenFed credit union will go up to 80% CLTV on an investment property as long as you don't have more than 3 rentals, in which from your post you should be fine. I have a few with them right now.

    Appraised value 460k x 80% is 368k. 368k - your 1st mortgage of 312k = 56k.

    56k is what you should be able to pull out with an interest only line of credit on the investment property assuming you qualify.

    0Reply
  • Karen O.
    NYC, NY · Member since 2016 · 619 posts · 456 votes
    7y

    Have you tried Quicken Loans

    and TD Bank?

    0Reply
  • Matthew Cyriac
    Member since 2016 · 11 posts · 4 votes
    7y
    Originally posted by @John D.:

    Have you considered calling it a second/vacation home? So long as you don't need the properties rent in your DTI calculation, that may be a good option.

    How would you go about doing this? I don't need the rent for the DTI calculation but not sure how I would do this without providing false information to a bank.

    0Reply
  • John D.
    Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    7y

    Different lenders have different guidelines on what a "second home" is.  Many are OK with a 2nd home being rented out some of the time, so long as you occupy it some of the time as well, and it is not a full-time rental.  Talk with lenders.

    1Reply
  • Lee Okussick
    Member since 2019 · 1 post · 0 votes
    7y

    I'm encountering the same issue and looking to secure a HELOC in Cape Cod for a property we use as a 2nd home and short term rentals. Curious where you ended up with your HELOC. Estimate property worth $425k, mortgage currently at $283k. First mortgage rate at 3.5% so don't want to refi/cash out.

    0Reply
  • Jim BlackburnBusiness Member
    Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes
    7y

    @Ashley Pohlman

    I work with over 100 banks and none of them offer a HLOC on investment property.

    If anybody has a good source, would you provide it to me?

    I do know of a bank that offers 90% CLTV on primary residence and Lot of investors tap into their primary home equity like that to reinvest in other properties.

    954-993-1625
    Stairway Mortgage, a Division of NEXA Mortgage LLC597 Reviews
    WebsiteView Page
    0Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    7y
    I had a small Bank  give me helocs  on two of my three southern rentals. But they would only do it if it was close to the bank.

    I think you need to be looking at quite a few local small Banks and credit unions it may depend on the region. But you have to talk to quite a few. They' lent up to 80%.


    Originally posted by @Jim Blackburn:

    @Ashley Pohlman

    I work with over 100 banks and none of them offer a HLOC on investment property.

    If anybody has a good source, would you provide it to me?

    I do know of a bank that offers 90% CLTV on primary residence and Lot of investors tap into their primary home equity like that to reinvest in other properties.

    0Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    7y

    The first 4 (below) I’ve confirmed. The others are from BP members.

    Trustco

    US Bank

    TD Bank

    PenFed

    Union Bank, specializes in noo HELOC

    Arvest Bank

    Utah: Americafirst 80% LTV on noo

    First Florida Credit Union(Jacksonville area)

    HELOC in Texas from Hurst Lending and Insurance

    2Reply
  • Tim Lucas
    Investor · Redmond, WA · Member since 2021 · 54 posts · 27 votes
    2y

    See this thread. https://www.biggerpockets.com/forums/643/topics/993980-investment-property-heloc?

    0Reply
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