Are you able to take equity out of a rental property ??

24 Replies

There is a type of home equity loan you can get to buy houses with or use as down payments. I do not recall the name. I have never gotten one for fear my wife would kill me in my sleep. I think it is HELOC. You can with seasoning refinance a rental and take cash out if the mortgage is less than 75 to 80% of its appraised price. Some banks used to let you take a second mortgage on a rental with a lot of equity as down payment on a new purchase. I do not know if they are allowed to do that anymore.

yes you can take cash out of a rental property as long as you have 30% equity or 35% equity depending on the lender. In the good old days like six years ago a rental only needed 20% equity. Since the real estate crash of 2008, lenders have gotten tigher with their cash out lending. You can go up to 80$ ltv on your principle residence for cash out.

http://rosevillemortgagebroker.com/

Yes you can take equity out of rental properties. most banks in my area allow up to 75% LTV but some a bit more some a bit less. Buying homes with cash to get the best deal, pulling money out via equity loan/credit to buy another home is a good way to go.

Keep in mind most lenders/banks don't want to see more than 4 mortgaged units so it gets a bit tricky after. that.

Most banks will loan 75% ltv. There is no limit on the commercial side (at least with my credit union) I have 4 loans out right now and all at about 5% apr and 20 year loans.

You may be able to find a private lender to fund a cash out mortgage on the rental property. If the LTV were low and the rental income covers the payments it might not even be that hard to find someone interested. If I were looking at such a deal my main concern would be the exit strategy. A self amortizing loan would would provide an easy solution. Rates and terms can be anything that you and your new lender/investor agree upon.

Originally posted by @Joseph Tarallo :
How do I take the equity out of a rental property for a down payment on another one ? Or can you only take it out of your main residence ?

I'll be honest, everyone gave some very solid answers...

I just wanted to comment you look like (from your pic) the rapper Macklemore.

LOL.

Buy without a doubt, you can pull equity from your rental.

Big Henry

If you have more than 4 conforming mortgages, you can't do a cash our conforming mortgage on any of your rentals (but you can on your primary residence)

As someone stated, you might be able to get a private money loan,,but as far as conforming mortgages, no cash out after mortgage 4

andy

You could also co-collateralize your property as a down payment. Ask your lender about it. It may save you from having to pull the equity out.

@Andrew S yes, I actually hope to close on two refinances next week,,I'd love to take cash out, but they are mortgages 5 and 6, and are conforming, so no cash out.

The only thing you can do is pay cash for the property, then finance it within 6 months, and possible pull cash out,,I have never done that so don't know exactly what you can and can't do on that.

One thing some don't know, if you have two mortgages on rentals, one mortgage on your residence, and have 2 houses in hard money,,you CAN'T use conforming on either of the others, because you already have mortgages against 5 properties,,so you have to do number 4 as if its number 5,,,,the reason I know,,I got caught on that one

I've done it many, many times (maybe too many). Buy a house with cash or line of credit, get a renter in there, refinance ("take the equity out"), and then go onto the next one. Before the crash, I would even take out more than I had put into it. But this can lead to negative cash-flow. Anyway, it can surely be done. I found it easier to do this with small, local banks.

I want to buy another property which my main residence and rental property are both pAid off I just want to take some equity out so I can buy another ... Preferably out of my rental. What's the best way to do it ?

go to your bank and tell them you want to refinance your rental. They will have it appeared and should loan you up to 75% of appraised value usually for a 20 year term. Do commercial loan so it doesn't show on your personal credit and will not affect your debt to income ratio moving forward. I use my credit union and have no problem at all getting money from them. As long as you have good credit it shouldn't be an issue.

@Andy Collins

I can now confirm your information as my mortgage broker apparently spoke too quickly (or misunderstood my question). No cash-out for mortgages #4+.

I'm now pursuing the other option you mentioned - it apparently has its own term "delayed financing" in the industry. I think this will be perfect for my current project.

i get them numbers all day long through my credit union. Just got approved for a commercial loan for 292,000 for 25 years at 5% and no one will ever see it on my credit

I realize this is an old thread and I hope some of you are still active on BP. I have a duplex in Ohio I have a verbal offer accepted. I am using a hard money lender. I will need to draw out the equity of the property to pay off my lender. What type of loan can I do this with. I have an LLC and want the property in the LLC. I have talked to several banks and a commercial lender and have got nowhere. Any help/guidance would be greatly appreciated!

did you send in an offer to buy a duplex or has someone sent you an offer to buy your duplex?

How much do you owe on your hard money loan?   How much do you think the property is worth. 

those answers will help people to give you advice. you will need a commercial lender or portfolio lender since you have the property titled in a LLC. They will have something like 70% ltv max on cash out .

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