HELOC on Investment Property
Hello, me and my partner owns a SFR free and clear in Florida which we are almost completed with renovation. We are planning to rent it out to a long-term tenant. We are interested in HELOC so wanted to ask to see if there's any bank out there willing to do HELOC on an investment property. Also, we are planning to change the title to LLC as well if possible. In addition, I would love to hear feedback on this idea that we have and would appreciate any feedbacks whether this is a good option or perhaps there are better options available.
There may be institutional lenders that offer a HELOC on an investment property, but you would likely have many more lender options and a lower interest rate structuring the transaction as a "cash out" refinance. (You just need to weigh the benefits of only paying interest only on the funds accessed and a higher interest rate with the HELOC vs. paying interest on all funds and a lower interest rate, etc. with the refinance). None of my private lender clients offer a HELOC, but most will offer a "cash out" refinance up to 70% LTV at a 10%+ interest rate.
Transferring title to an LLC is a very wise decision for both asset protection and estate planning considerations (if properly structured). However, a few institutional lenders do not permit title to be held in any entity. Conversely, all of my private lender clients require that title be held in an LLC (primarily to avoid any later claims under Florida's Homestead rights).
Hi Sterling,
Darin, is correct. Investor HELOCs are unicorns in our industry right now. HELOANs are available, but in this situation, you may as well do a simple cash-out refinance to lock in a lower interest rate. Regarding closing in an LLC...We do it every day at 75% LTV on cash-outs in LLCs at rates much lower than what Darin's clients are experiencing. DM me if you would like to discuss your options. I am licensed in Florida.
