How to get equity out of investment property

Mortgage Brokers & Lenders
7moFollow

How to get equity out of investment property

Ramya Manchu
Member since 2023 · 9 posts · 7 votes

Investment property is in Wisconsin with equity around 300K. Self employed with more than 2 yrs of LLC history. Taxable income is low due to lot of tax deductions. I don't think I would qualify for conventional HELOC due to high DTI. any suggestions on how to take out the equity to buy another investment property? Thanks

1Reply
763 views

Most Popular Reply

Nate HerndonPro Member
Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
7mo

@Ramya Manchu for the investment property space, the strong majority of investors are utilizing cash-out refinances via DSCR programs. A Debt Service Coverage Ratio (DSCR) loan does not underwrite to your personal income, taxes, DTI, etc. It only considers the subject property and whether its actual income (or potential income via market rents) can support the loan that you desire.

The rates that I am seeing as of late for 75% LTV cash-out refinances (75% LTV is the maximum offered for cash-out on investments in Wisconsin) are in the 6.00-6.50% range for strong borrowers, good cash-flowing properties, and loan amounts above $150,000.

I'd be happy to review the scenario with you as needed to show what 65/70/75% LTV would look like. A lot of my investor clients in the greater-Milwaukee area are getting high 5% to low 6% rates on their DSCR purchases right now, also.

As for HELOCs, your local bank or credit union would be the best route to go for that. However, I'm hearing that many local institutions are not lending on investment property HELOCs at this time.

[email protected]417-605-2196
2Reply
See this reply in the discussion

21 Replies

Jump to latestLatest
  • Sid S Kum
    Investor · Boston, MA · Member since 2026 · 6 posts · 3 votes
    7mo

    In your case I think a refinance would make sense if you're currently in the 6% or above interest rate. Based on 80% LTV, I believe the bank would be able to lend you upto 240K minus your current loan balance.

    If you're in the 2-3% interest rate then the refinance would force you to go into a higher interest rate mortgage in which you would pay more P&I. In this case I think a HELOC would make sense where your original mortgage terms stay untouched but you would be holding an extra loan on your first investment property along with the existing one and seems like the national avg for an HELOC currently is around 7%

    1Reply
  • Pierre Guirguis
    Lender · Marlboro, NJ · Member since 2025 · 243 posts · 150 votes
    7mo

    This is a pretty common situation for investors who are self-employed and take advantage of deductions. A lot of conventional lenders focus heavily on personal income and DTI, which can make it difficult to access equity even when the property itself has strong cash flow.

    In cases like this many investors look at financing that's based more on the property's income rather than personal income. DSCR loans are one example where the lender is primarily looking at whether the property's rental income supports the loan rather than your personal DTI.

    Another route some investors use is a cash-out refinance instead of a HELOC, especially when there's a significant amount of equity and stable rental income.

    If you want to take a closer look at what the numbers might support, feel free to reach out. Happy to help run through a few scenarios.

    1Reply
  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    7mo

    @Ramya Manchu for the investment property space, the strong majority of investors are utilizing cash-out refinances via DSCR programs. A Debt Service Coverage Ratio (DSCR) loan does not underwrite to your personal income, taxes, DTI, etc. It only considers the subject property and whether its actual income (or potential income via market rents) can support the loan that you desire.

    The rates that I am seeing as of late for 75% LTV cash-out refinances (75% LTV is the maximum offered for cash-out on investments in Wisconsin) are in the 6.00-6.50% range for strong borrowers, good cash-flowing properties, and loan amounts above $150,000.

    I'd be happy to review the scenario with you as needed to show what 65/70/75% LTV would look like. A lot of my investor clients in the greater-Milwaukee area are getting high 5% to low 6% rates on their DSCR purchases right now, also.

    As for HELOCs, your local bank or credit union would be the best route to go for that. However, I'm hearing that many local institutions are not lending on investment property HELOCs at this time.

    [email protected]417-605-2196
    2Reply
    • Avi Weichman
      Lender · Member since 2026 · 19 posts · 2 votes
      3mo

      Just mentioning an alternative to the super popular method that @Nate Herndon mentioned is, business bank statement loan.

      with it, the property does not have to be cash flow positive it can even be for your primary home as long as your business is doing healthy gross revenue numbers you probably can qualify.

      I usually end up seeing rates almost at the same levels as DSCR

      0Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    7mo

    DSCR or Bank Statement loan. Whether this equity is usable also depends on whether the property is currently free and clear or if there is currently a loan on it and the terms. May not be worthwhile or pragmatic.

    1Reply
  • Bryon AndrewsBusiness Member
    Real Estate Agent · Saint Paul, MN · Member since 2018 · 201 posts · 104 votes
    7mo

    @Ramya Manchu You may need to look into a DSCR style loan. This way the lender will be looking at the financials of the building vs your personal income. My experience with small town, local banks in Western Wisconsin has been that they still want a personal guarantee and look into your personal financial situation. However, they are more interested in the buildings performance itself. There are also some national lenders that you can connect with who may have more favorable terms.

    [email protected]715-892-4596
    Bryon Andrews Real Estate51 Review
    View Page
    1Reply
  • Derek BrickleyBusiness Member
    Lender · Ann Arbor, MI · Member since 2021 · 668 posts · 227 votes
    7mo

    Hey Ramya!

    I'd second what others have said, but depends how much you'd like to get out ideally and how soon you'd use it.  

    Are you 100% sure though income wouldn't work? You can get an investment property equity line up to 70% of the value of the home.

    If not, you could look at a bank statement equity line or a DSCR second mortgage. The terms on those aren't pretty, but depending what you have on your first lien now it could be beneficial.

    Otherwise like already said you could do a full cash out refinance with a DSCR loan. I typically don't see investors use bank statement loans on investment properties since there isn't much of a benefit. DSCR will also allow you to consider a prepayment penalty which could improve the terms and invcrease your cashflow.

    If it's helpful to look at some of those though feel free to reach out

    [email protected]734-645-7722
    Gold Star Mortgage Financial Group548 Reviews
    WebsiteView Page
    0Reply
  • J CastroBusiness Member
    Lender · Florida · Member since 2025 · 698 posts · 253 votes
    7mo
    Quote from @Ramya Manchu:

    Investment property is in Wisconsin with equity around 300K. Self employed with more than 2 yrs of LLC history. Taxable income is low due to lot of tax deductions. I don't think I would qualify for conventional HELOC due to high DTI. any suggestions on how to take out the equity to buy another investment property? Thanks

    Hey @Ramya Manchu,
    What you’re describing is actually very common for self-employed investors—strong equity positions but lower taxable income due to legitimate business deductions, which can make qualifying for conventional HELOCs more difficult.

    One option many investors in your position explore is a DSCR (Debt Service Coverage Ratio) loan or an investment property cash-out refinance. These programs focus primarily on the property’s rental income and overall deal strength rather than personal income or DTI, which can make them a good fit for self-employed borrowers.

    At JCREIG Capital Funding, we work with investors across the country and help structure financing for situations just like this—especially for self-employed borrowers who want to continue scaling their portfolios.

    If you’d like, I’d be happy to take a look at the property details and walk you through a few options that may work for you.

    JCREIG Capital Funding
    WebsiteView Page
    0Reply
  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    7mo

    Try speaking with Zach Starnes or Eric Wennerstrand/John Haydin--both are local mortgage brokers that help many investors here. 

    Captain Save-A-Home LLC
    WebsiteView Page
    1Reply
  • Austin ClarenceBusiness Member
    Lender · Phoenix, AZ · Member since 2023 · 136 posts · 32 votes
    7mo

    There are HELOC options out there that only look at bank statement income and zero tax return income. Happy to connect

    [email protected]650-906-2376
    Austin Clarence with NEXA Mortgage552 Reviews
    View Page
    0Reply
  • Corina Eufinger
    Rental Property Investor · Oconomowoc, WI · Member since 2016 · 996 posts · 431 votes
    6mo

    @Ramya Manchu I sent you a DM of someone who might be able to help you or lead you in the right direction. He's a very resourceful local lender in WI. 

    1Reply
  • Jeff Roth
    Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 466 posts · 257 votes
    6mo

    Hi Ramya!

    Congratulations on having an investment property in Wisconsin with around 300K in equity!

    You asked the best way to pull out equity to buy your next investment property as you are self employed and have a lot of deductions showing a lower income.

    One of the best ways to pull out equity is to do a cash out refinance with a Debt Service Coverage Ratio Loan (DSCR) that uses the property's income to qualify the loan and not your personal finances or a HELOC that uses a similar underwriting method.

    Top Your Success!

    0Reply
  • Steven GlickBusiness Member
    Lender · Buffalo · Member since 2024 · 115 posts · 33 votes
    6mo

    A DSCR cash-out refinance could be a good fit for your situation. Since it's based primarily on the property's rental income rather than personal taxable income, it can make it easier to access equity without relying heavily on tax returns.

    The key will be making sure the property’s rent supports the new loan after the cash-out and that you’re leaving enough buffer for stability. If structured well, it can give you the capital to move into your next investment without overcomplicating things.

    Happy to connect and walk through what a cash-out scenario might look like based on your numbers.

    [email protected]315-631-0678
    Ziffy Mortgage
    WebsiteView Page
    0Reply
  • Nyron Isaac
    Member since 2024 · 144 posts · 28 votes
    3mo

    Your high DTI is only an issue for conventional retail banks. Because you have more than two years of self-employed LLC history, you can bypass tax-return verification entirely. Traditional banks calculate income after your deductions; alternative real estate lenders calculate it differently.

    To pull that $300k in equity out, look into a Commercial Cash-Out DSCR Refinance. A true DSCR lender will completely ignore your personal tax returns, your DTI, and your job status. They will qualify the loan based entirely on whether the property's rental income covers the new mortgage payment.

    Alternatively, you can use a 12-Month Bank Statement Loan, where the underwriter reviews your gross LLC deposits rather than your net taxable income to establish your borrowing power.

    Target a specialized nationwide non-QM or digital commercial platform to execute this in Wisconsin, and expect them to cap your cash-out leverage at a standard 70% to 75% LTV!

    2Reply
  • Vijay FriedmanBusiness Member
    Miami, FL · Member since 2026 · 766 posts · 122 votes
    3mo
    Quote from @Ramya Manchu:

    Investment property is in Wisconsin with equity around 300K. Self employed with more than 2 yrs of LLC history. Taxable income is low due to lot of tax deductions. I don't think I would qualify for conventional HELOC due to high DTI. any suggestions on how to take out the equity to buy another investment property? Thanks

    @Ramya Manchu
    Low taxable income is a common challenge for self-employed investors. Depending on the property and your long-term plans, you may have options beyond a conventional HELOC, such as an investment property cash-out refinance or other investor-focused lending programs. Is the Wisconsin property currently rented, and are you looking to keep it as a long-term rental?

    786-656-0387
    DreamPoint Capital
    WebsiteView Page
    0Reply
  • James Driscoll
    Banker · MA · Member since 2026 · 120 posts · 33 votes
    3mo

    Great breakdown already in this thread. A few things worth layering in for @Ramya Manchu and anyone else evaluating this:

    **Cash-Out Refi via DSCR — Key Variables**

    The 75% LTV cap on cash-out mentioned here is fairly standard across most DSCR programs nationally, though some lenders will stretch to 80% LTV on rate/term refis. On cash-out, 75% is typically the ceiling, and the DSCR ratio itself matters a lot — most programs want to see at least 1.0x (income covers debt service), though pricing improves meaningfully at 1.25x and above. If your property is borderline on DSCR, structuring the loan amount carefully to hit that 1.25x threshold can make a real rate difference.

    **The HELOC Reality Check**

    The note about HELOCs on investment properties is accurate — availability is thin and terms are often unfavorable compared to a cash-out refi. That said, if you're sitting on a low first-mortgage rate and don't want to refinance it away, a HELOC (when you can find one) or even a second-lien DSCR product might be worth exploring. It's a genuine tradeoff: preserve a low rate vs. consolidate into one clean loan at today's rates.

    **How I Model This for Investors**

    After 31 years in the mortgage business, the single most useful thing I do upfront is run side-by-side scenarios — 65%, 70%, and 75% LTV — showing the actual cash-out proceeds, new payment, and whether the DSCR still clears at each tier. That math tells you pretty quickly which structure actually improves your cash position vs. just looks good on paper.

    Happy to weigh in further if anyone wants to talk through a specific scenario here in the thread.

    ---

    Jim Driscoll

    0Reply
  • Simcha B Shedrowitzky
    Lender · Nationwide · Member since 2024 · 76 posts · 24 votes
    3mo
    Quote from @Ramya Manchu:

    Investment property is in Wisconsin with equity around 300K. Self employed with more than 2 yrs of LLC history. Taxable income is low due to lot of tax deductions. I don't think I would qualify for conventional HELOC due to high DTI. any suggestions on how to take out the equity to buy another investment property? Thanks

    Hi Ramya,

    I would suggest the following:

    Step 1: Evaluate the Property's Cash Flow

    • Standard DSCR Cash-Out Refinance: If the rental income covers the new mortgage payment (a ratio of 1.0x or higher), a traditional DSCR loan is your best path. Lenders ignore personal DTI and tax deductions, looking only at the property's performance.
    • Leverage Limits: Expect lenders to cap cash-out refinances in Wisconsin at 75% to 80% LTV.
    Step 2: Utilize Alternative Options

    If It Doesn't Cash FlowIf the property's current rent cannot cover the new, higher mortgage payment, you still have excellent alternative paths:
    • No-Ratio DSCR Loan: This program eliminates the cash-flow test entirely. You can still pull equity out based strictly on the property's appraised value, bypassing both personal income and property income restrictions. 
    • Bank Statement Loan: Since you have over 2 years of LLC history, you can qualify using 12 to 24 months of gross business bank deposits. This completely bypasses your tax returns and net tax deductions.

    Much success!


    0Reply
  • Jacob Stone
    Lender · Irvine, CA · Member since 2026 · 4 posts · 1 vote
    3mo

    I wouldn't assume a conventional HELOC is the only path just because your tax returns show lower taxable income.

    This feels like the kind of scenario where the right structure can make a big difference, especially with self-employed borrowers and investment properties. I'd have a licensed mortgage professional compare a few options before assuming you're out of choices.

    Wishing you the best.

    0Reply
  • J CastroBusiness Member
    Lender · Florida · Member since 2025 · 698 posts · 253 votes
    3mo

    @Nate Herndon, @Pierre Guirguis, and @Derek Brickley all brought up solid options. From a lender's perspective, the biggest mistake I see investors make is assuming they have only one way to access their equity.

    With approximately $300K in equity, the first step is to determine what your end goal is. Are you looking to pull the maximum amount of cash, keep your existing low first mortgage, or optimize monthly cash flow? The answer can change the financing strategy.

    If your current first mortgage has a very attractive interest rate, replacing it with a cash-out refinance may not always be the best financial decision. In some cases, a second-lien loan or investment property HELOC can make more sense. On the other hand, if the current rate is higher or you need maximum leverage, a DSCR cash-out refinance is often the more practical solution.

    One other point I'd add is to review the property's Debt Service Coverage Ratio before making assumptions about how much equity you can access. A property may have substantial equity, but the loan amount is still subject to the property's ability to support the debt under the lender's DSCR guidelines.

    My recommendation is to have a lender run a few side-by-side scenarios—cash-out refinance, second lien, and HELOC if available. Comparing the proceeds, monthly payments, and total borrowing costs will help you choose the option that best supports your investment goals rather than simply taking the largest loan available.

    We'd be happy to do a complimentary financing analysis for you. We'll review your property's equity, rental income, current loan, and investment goals, then walk you through the financing options available so you can make an informed decision. There's no obligation—we're simply here to help you determine the strategy that best supports your next investment.

    Sometimes a 15-minute conversation can uncover opportunities that save thousands of dollars and put you in a stronger position to grow your portfolio.

    JCREIG Capital Funding
    WebsiteView Page
    0Reply
  • Corina Eufinger
    Rental Property Investor · Oconomowoc, WI · Member since 2016 · 996 posts · 431 votes
    2mo

    If you are still in need of this...reach out to Zache Starnes;s local to WI and has been a great resource for my clients.  I know he's worked with people pulling out equity of diverse situations. He's easily "google-able". 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free