Accessing Equity on an Investment Property
Member since 2019 · 11 posts · 2 votes
Accessing Equity on an Investment Property
5 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
We work with a few lenders that can do a 2nd position but only go to 65% ltv. Happy to provide referral
7e investments53 Reviews - Member since 2023 · 120 posts · 26 votes1y
Yes, second position mortgage is perhaps the best idea, but will only give you about $200k, if that's enough for your project.
- Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes1y
Hey Anthony, sounds like you guys are sitting on a great opportunity — and I get why you definitely don’t want to touch that 3.25% rate in this environment. Totally makes sense.
Here's the deal: you're right — you don't want to refinance if you can avoid it. Rates today would probably be double that, and it would kill your cash flow. What you're looking for is either a HELOC (home equity line of credit) or a home equity loan against the property, without touching the main mortgage.
Quick breakdown:
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HELOC acts like a credit card against your property. You can pull money as needed, only pay interest on what you use. Good flexibility if you're planning project-by-project investments.
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Home equity loan is more like a second mortgage — lump sum, fixed payments. Good if you know exactly how much you need and you’re ready to put it to work right away.
Some banks will do investment property HELOCs, but it’s a little trickier in NYC, especially on multi-families. Rates will obviously be higher than your first mortgage, but it can still make a lot of sense if the deal you’re investing in has solid returns.
Another option: business lines of credit. Since you run your own architecture firm, you might be able to secure a business credit line based partly on your firm’s financials and the fact that you have real estate assets. Sometimes it’s easier (and cheaper) to tap business financing than personal property debt, depending on the situation.
In short — yes, you can access that equity without refinancing the 3.25%. You’ll just need to shop for lenders that do investment property HELOCs or second position loans, and maybe also talk to a business banker while you’re at it.
- Member since 2019 · 11 posts · 2 votes1y
Hey Mohammed. Thanks for your reply awhile back regarding Investment property helocs or other ideas for preserving our 3.25% on what used to be our home but now is a rental. Unfortunately we never got a heloc when it was our primary and now we are where we are.
do you know of any institutions that do these types of Helocs? I’ve also been researching DSCR loans but the rates and prepay penalties are a bit intimidating.
if you are available for a call to talk through potentials and maybe exit strategies when considering the various options that would be great.
thanks
anthony
2023209903
Quote from @Mohammed Rahman:
Hey Anthony, sounds like you guys are sitting on a great opportunity — and I get why you definitely don’t want to touch that 3.25% rate in this environment. Totally makes sense.
Here's the deal: you're right — you don't want to refinance if you can avoid it. Rates today would probably be double that, and it would kill your cash flow. What you're looking for is either a HELOC (home equity line of credit) or a home equity loan against the property, without touching the main mortgage.
Quick breakdown:
-
HELOC acts like a credit card against your property. You can pull money as needed, only pay interest on what you use. Good flexibility if you're planning project-by-project investments.
-
Home equity loan is more like a second mortgage — lump sum, fixed payments. Good if you know exactly how much you need and you’re ready to put it to work right away.
Some banks will do investment property HELOCs, but it’s a little trickier in NYC, especially on multi-families. Rates will obviously be higher than your first mortgage, but it can still make a lot of sense if the deal you’re investing in has solid returns.
Another option: business lines of credit. Since you run your own architecture firm, you might be able to secure a business credit line based partly on your firm’s financials and the fact that you have real estate assets. Sometimes it’s easier (and cheaper) to tap business financing than personal property debt, depending on the situation.
In short — yes, you can access that equity without refinancing the 3.25%. You’ll just need to shop for lenders that do investment property HELOCs or second position loans, and maybe also talk to a business banker while you’re at it.
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- Investor · CT · Member since 2023 · 10 posts · 0 votes11mo
Would you be interested in a partial buyout of the note? It might be a possibility if you are looking to free up some capital?
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