I own two fourplexes in Enterprise, AL (8 units total), held for about 10 years. They’re worth roughly $500K combined, with about $105K owed at 3.2% and 4.2%. They’re fully rented and professionally managed. My goals: • Keep both first mortgages. Those rates are too good to give up. • Qualify on the properties’ rental income, not my personal DTI. I’m saving that for a future HELOC on my primary residence. Keep both first mortgages. Those rates are too good to give up. Qualify on the properties’ rental income, not my personal DTI. I’m saving that for a future HELOC on my primary residence. The money would fund my next add-value flip. How would you structure it? • Two bank-statement HELOCs, one on each building? • One commercial loan or line across both properties? • Keep hunting for a bank that will do a true commercial loan second? • Something I haven’t thought of? Two bank-statement HELOCs, one on each building? One commercial loan or line across both properties? Keep hunting for a bank that will do a true commercial loan second? Something I haven’t thought of? So far, out of the 8 local banks I’ve called, they won’t do a commercial loan or line in second position. I haven’t asked about residential seconds yet. The best offers I have are a 7.25% commercial refi for both properties in first position (which means losing my low rates) and a 9.7% fixed bank-statement second with a full draw. I'd love to hear what advice is out there! Thanks in advance Kris UPDATE: The consensus seems to be to keep the first liens and find a second DSCR HELOC, Commercial Line for each property or across both properties. I would love to run numbers and talk to potential lenders if anyone can share some contact information. I don't know if it is against policy to recommend names or companies on this forum, since I haven't gotten any, but if that is the case then feel free to DM me.

There are some good comments here. I think the key is making sure that if you’re borrowing at a higher rate, the return on that money justifies the cost. Sometimes you have to leverage existing assets to acquire the next one, but you also have to be careful not to overleverage and structure it correctly. Traditional banks can be pretty cookie-cutter, which is why working with someone who understands non-agency lending and common-sense underwriting can make a big difference. There are second-lien options that may allow you to keep those low-rate first mortgages in place, as well as business lines of credit worth exploring. It’s really about finding the right structure for what you’re trying to accomplish, not just getting access to the money.

Hi Kris, How would you structure it? You can either structure a 2nd position DSCR loan or a DSCR HELOC. A fixed second might work in your favor if you do not plan on repaying the principal balance ASAP and rather use the rents to pay off both liens over time. A HELOC will work mainly on flips for other properties or BRRRRs. Keeping a line of credit open will help you scale faster.

@Kris Lawhead Before you pull equity off those 3.2% and 4.2% firsts, we can fund the next add-value flip itself. We place fix and flip loans on 1 to 4 unit homes, up to 90% of cost and 100% of rehab. When you have the purchase price, rehab budget, and ARV, I'm happy to run a quick funding review so you know the cash gap without touching the fourplexes.

I'd be careful not to overvalue low interest on $100,000 in debt. Sure, it's a warm and fuzzy feeling, but depending on your broader financial situation, it might be less monumental than you are thinking it is. With that amount of equity, I would be surprised if you can't find a bank willing to lend at least 75% loan-to-value, which would free up a few hundred thousand. Are these buildings in good shape? Do they make you money? Are they assets you could see yourself keeping for another decade? These are the questions I would be asking myself.

Kris, at roughly 21% loan-to-value you have plenty of room. The question is who will sit behind those two first mortgages. A few routes I'd compare: • A business-purpose second lien on each building. These underwrite on the rents, not your DTI, but they price well above a first and usually cap combined loan-to-value around 70 to 75%. • A cross-collateralized bridge on both buildings for the flip itself. It's short-term, paid off when the flip sells, and the firsts stay put. • A cash-out on just one fourplex, keeping the better of the two rates. A business-purpose second lien on each building. These underwrite on the rents, not your DTI, but they price well above a first and usually cap combined loan-to-value around 70 to 75%. A cross-collateralized bridge on both buildings for the flip itself. It's short-term, paid off when the flip sells, and the firsts stay put. A cash-out on just one fourplex, keeping the better of the two rates. Either way, check that both first mortgages allow subordinate financing before you apply. Some older notes have a due-on-encumbrance clause. How much do you need for the flip?

Hey Kris, There are two ways we can approach this. First, we’ll quote you the HELOAN options (second mortgage) so you can see what your combined monthly payment would look like with both mortgages in place. We’ll also quote a first mortgage cash-out refinance so you can compare the monthly payment and total interest paid against the first and second mortgage structure. This will give you a clear picture of both options and allow you to determine which approach makes the most financial sense for you as an investor. I’m the owner of Ocean Coast Mortgage, and we specialize in investment-purpose lending. We’ll be able to walk you through the numbers and help you determine the best path forward. Feel free to reach out if you need anything in the meantime.

Hi Kris — keeping those 3.2% and 4.2% firsts in place is the right call. I can look at second-position options on rented fourplexes like this — a commercial line or a DSCR-style second priced off the rental income, rather than a refi. A few quick things: what are the two properties bringing in monthly in rent, and how much are you looking to pull out? Also the annual taxes and insurance on both, your credit score range, and whether you hold them in an LLC or personally — that completes the picture, and with those I can give you a straight answer on whether the numbers work. Jiao Liu, Eirvale Financial Services

Don't touch those firsts. Refinancing away 3.2% money to pull cash is the most expensive way to fund a flip — you'd be trading cheap debt for expensive debt on the whole balance, not just the cash you take out. The tool that fits here is a 2nd-position investor HELOC. It sits behind the 3.2% and 4.2% loans, so those stay exactly where they are. No appraisal, you draw only what you need for the flip, and it qualifies on the rental income / bank deposits rather than your personal DTI — that's the whole point of the investor version. On your numbers: $105K owed plus a $250K line is about 71% of a $500K value, which is in range for a 2nd on an investment property. Whether it pencils comes down to the DTI check on the combined payments — debts can be paid off to qualify, and bank-statement income often comes in higher than paper income, so it's worth running rather than guessing. A DSCR cash-out refi exists too, but it's a first-lien refi — it would replace the cheap loans. Only makes sense if you were refinancing anyway. For what you described, the 2nd keeps the math working. Happy to run your numbers if you want a second set of eyes — Dan

How to pull equity from 2 fourplexes that have a 3% & 4% mortgage rates??

Jim BlackburnBusiness Member

Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 329 posts · 126 votes

6d

@Kris Lawhead - two rental helocs/he loans are the way to go so you don’t lose your low rates. Jim

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Max Comperatore

Technology · New York, NY · Member since 2026 · 68 posts · 19 votes

5d

Kris, Ashish and Rickey framed it correctly: protect the firsts and price the second on property income. The math supports them. Your $105K firsts blend to 3.63%. At a 25-year amortizing constant near 6.1%, annual debt service is about $6.5K against $72K gross rent. Even at a 50% expense ratio, NOI is $36K, so first-lien DSCR is roughly 5.5x. A $150K second at 9.7% interest-only adds $14.6K, total debt service $21.1K, DSCR about 1.7x. That clears a 1.25x floor. Combined LTV is 51%, well inside a 65% second-lien box.

Devin and Stephen are right on structure. One lien per building preserves optionality; a blanket cross-collateralizes. The 7.25% cash-out refi is a false economy. Replacing $105K at a 3.63% blended rate with $255K at 7.25% creates roughly $15.6K of incremental annual debt service on the $150K you need, an effective 10.4% cost, while extinguishing the cheap firsts. The 9.7% second is cheaper carry and keeps the asset-level debt constant low.

Rickey's draw point is the real proof. A full draw starts $14.6K of annual interest immediately. A draw-style line sized to the flip's S-curve, with average outstanding near 60%, carries about $8.7K. On the flip, $150K against $400K all-in is 37.5% LTC; against a $500K ARV it is 30% LTARV. Horizontal infra per pad is zero here because both assets are stabilized vertical improvements, so no development carry. What is your actual all-in basis and ARV, and will the lender commit a draw schedule before you close?

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Justine Sanchez

Member since 2020 · 27 posts · 4 votes

5d

Hi Kris, keeping those 3% and 4% firsts is the right call if you only need a slice of the equity for the next flip. Local banks often won't do investor seconds, so the products that usually fit are non-bank DSCR-style HELOCs or second-position loans that qualify mainly on the rent roll rather than your personal DTI. I'd price one loan per building versus a blanket across both, because separate liens leave you free to sell or refi one later. Before you lock anything in, compare the full cost of the second (fees, draw rules, and how much they'll actually advance behind your firsts) against what you expect the flip to return, and confirm your current first mortgages even allow a second lien. Roughly how much are you looking to pull for the next deal?

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Kris Lawhead
OP
Rental Property Investor · Coeur d'Alene Idaho · Member since 2016 · 17 posts · 8 votes
2d
Hi Justine, thanks for the reply. Several people have now pointed me toward non-bank DSCR-style seconds, so that's where I'm focusing.
To answer your question, I’m looking to pull about $75–100K. The plan is to use a hard-money lender for most of the purchase and rehab on a flip around $400K in Coeur d’Alene, Idaho, and use my equity to cover the gap.
Do you have any non-bank lenders you'd recommend for DSCR-style seconds on 2–4 unit rentals in Alabama? And if you lend yourself, I'd be glad to see what you could offer.
Thanks,
Kris
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Kris Lawhead
OP
Rental Property Investor · Coeur d'Alene Idaho · Member since 2016 · 17 posts · 8 votes
2d
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Gregory Vassilatos

Investor · Member since 2026 · 12 posts · 2 votes

3d

Kris, don't touch those firsts. The 7.25% commercial refi looks cheaper until you reprice the whole $105k, while a second only costs you on the new money. Local banks often don't offer investor seconds, so non-bank HELOCs or closed-end seconds sized off the rent roll are the usual fit. With about $6k a month in rent and $105k owed against roughly $500k, the equity is there. Confirm the firsts allow a junior lien, then price one lien per building against a blanket loan. A draw-style line sized to the flip gap ($75–90k) usually beats a full-draw second, so you're not paying interest on idle cash. Happy to sanity-check combined LTV and what a rent-qualified second would typically look like if you DM me the rent rolls and target draw.

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Kris Lawhead
OP
Rental Property Investor · Coeur d'Alene Idaho · Member since 2016 · 17 posts · 8 votes
2d
Hi Greg, thanks for the reply. You’re the fourth or fifth person to say “don’t touch the firsts,” so I’m convinced.
Here’s my summary:
- Two fourplexes in Enterprise, AL, worth about $250K each
- Rent: $750/unit, $3,000/month per building, 100% occupancy for years
- Balances: about $60K on one and $45K on the other, at 4.6% and 3.2%
- Target draw: $75–100K as a draw-style line, to cover the gap on a flip
Could you sanity-check the combined LTV and tell me what a rent-qualified second would typically look like, including rate, fees, and draw rules? And if you lend, I'd be glad to see a quote.
Thanks,
Kris
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Kris Lawhead
OP
Rental Property Investor · Coeur d'Alene Idaho · Member since 2016 · 17 posts · 8 votes
2d
Hi Greg, thanks for the reply. You’re one of several people saying “don’t touch the firsts,” so I’m convinced. Here’s my summary:
Unit 12 (Wells Fargo)
- About $45K owed at 4.625%
- Rent: $3,000/month, near 100% occupancy for years
- Taxes: $861/year; insurance: $2,602/year
Unit 10 (Carrington)
- About $60K owed at 3.3%
- Rent: $3,000/month, near 100% occupancy for years
- Taxes: $1,323/year; insurance: $3,648/year
Both are fourplexes in Enterprise, AL, worth about $250K each. My target draw is $75–100K on a draw-style line.
Could you sanity-check the combined LTV and tell me what a rent-qualified second would typically look like, both per building and as a blanket, including rate, fees, minimum loan amount, and draw rules? And if you lend, I'd be glad to see a quote.
Feel free to DM me instead of replying on this.
Thanks,
Kris
Feel free to DM me instead of replying on this.
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James Loffredo

Lender · Dallas, TX · Member since 2024 · 29 posts · 11 votes

3d

Kris, don’t touch those loans for one flip. Honestly, who knows when we’ll see rates like that again?

I’d find a good lender that does 100% funding, which we do for experienced flippers, and bring as little cash into the flip as possible. Funding goes up to about 75% of the after-repair value, so run your numbers off that.

But do not touch those great interest rates.

Have you done a flip before?

I run a boutique lender, so weigh that.

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Kris Lawhead
OP
Rental Property Investor · Coeur d'Alene Idaho · Member since 2016 · 17 posts · 8 votes
2d
Hi James, thanks for the reply. Agreed, those rates stay put.
To answer your question: this would be my first flip as the lead investor, but my wife and her family flip property for a living and she's my business partner so I feel confident in our abilities. Plus we own an excavation and site work company, so we can self-perform a good chunk of the work.
My target is Coeur d’Alene, Idaho, with purchases around $350–400K.
A few questions:
- Do you lend in North Idaho?
- Would our team’s experience qualify for your 100% funding, or what would a first deal look like with you?
- What are your typical rate, points, and fees?
I appreciate you advise,

Kris
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James Loffredo
Lender · Dallas, TX · Member since 2024 · 29 posts · 11 votes
3h
Kris, yes, we lend in Idaho, Coeur d’Alene included.
On the 100%: that's for experienced flippers, and experience is judged on whoever is on the loan. So the way to use your wife's track record is to put her on the LLC and on the loan as a guarantor. Then her documented flips can count toward the tier. If it ends up being your first deal on paper, a first flip still gets most of the purchase and all of the rehab funded, with the loan sized up to 75% of the after-repair value. Doing your own site work helps a lot there too, because it keeps the rehab budget tight.
Rate and fees depend on that experience tier and your credit, so I'd rather not throw out a number that isn't yours. I'll send you a connection request, and when you have a Coeur d'Alene deal in mind, send me the purchase price, rehab budget and ARV and I'll run real numbers.
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Steve Waller

Lender · Houston, TX · Member since 2026 · 124 posts · 26 votes

3d

Kris, I'll take the other side of the "never touch those firsts" advice. Holding on to a 3-4% rate on a $105K balance, while roughly $395K of equity sits there earning nothing, doesn't make sense to me when that money could be going into new investments at 15%+.

Run it on your own numbers. A 75% cash-out on $500K is a $375K loan. Pay off the $105K and that's about $270K to put to work, before closing costs.

At the 7.25% you were quoted, the new loan costs about $27,200 a year in interest. You're paying roughly $3,900 a year on the $105K now. So the real extra cost of the $270K is about $23,300 a year, around 8.6% on the money you take out. That's still below the 9.7% second you were offered.

Put that $270K to work at 15% and it earns about $40,500 a year. That's a spread of roughly $17,000 a year, every year, and it compounds as you recycle the capital flip to flip. Keeping the low rate saves you around $3,700 a year. Leaving the equity parked costs you several times that.

The honest caveat: this only works if you really have the deals lined up and can keep the money working. Cash sitting idle at 7.25% is worse than the 3% loan you started with. If you'll only use part of it at a time, a line you pay on only when you draw it may be the better fit.

Non-bank lenders will do this on the rent roll rather than your personal DTI. They're just not local banks, which is why six of them told you no. Send me the rents, taxes and insurance on each building and I'll show you what each structure looks like side by side. My contact info is on my website, via my profile.

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Jim BlackburnBusiness Member
Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 329 posts · 126 votes
2d
@Steve Waller - Why not keep the 3% 1st and take a fixed 2nd up to 85-90% at 8-10%? You can still access the equity but keep the low cost of capital on the first.
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Cat Rauh

Lender · Irvine, CA · Member since 2026 · 36 posts · 12 votes

2d

Two options I haven't seen mentioned yet, since the seconds are well covered above.

First, skip the separate equity loan and put the equity to work on the flip itself. Some hard money lenders will take a second-position lien on a property you already own as additional collateral, and use it in place of your down payment on the flip. You keep both firsts, there's no separate loan on the fourplexes to carry, and the lien comes off when the flip sells. Ask each lender whether they do cross-collateral, because it varies a lot.

Second, do the blended-rate math before ruling out a cash-out refi. With only $105K owed, the low rate is saving you less in dollars than it feels like. Compare the extra yearly interest of refinancing that $105K at today's rate against what a second at second-lien pricing costs on the amount you actually need. Sometimes the refi wins, sometimes it doesn't, but it's worth running both.

Disclosure, I'm a lender, so I see owners with a lot of equity and a great first mortgage work through this one often.

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Quetzaly TorresPro Member

Investor · Jacksonville, FL · Member since 2026 · 55 posts · 7 votes

1d

Kris, throwing out a slightly unconventional thought since most of the discussion has been centered around finding the right second-lien product.

What if this is less of a "find a HELOC" problem and more of a capital-structure problem?

You have roughly $395K of equity across the two properties, very low first-lien balances, and the main goal is really just to access $75–100K without disturbing the 3%–4% debt.

One possible angle could be transferring one of the properties into a separate LLC you control, assuming the existing loan documents and lender/investor allow it, and structuring the capitalization differently.

For example, on a $250K property with a $45K existing first:

Existing first stays in place: ~$45K
Outside/private capital: ~$75–100K
Your remaining equity sits behind that in the structure

The outside capital could potentially be structured as business-purpose debt, preferred equity, or another agreed capital position rather than trying to force it into a traditional HELOC or conventional second.

The important distinction is that the LLC transfer itself doesn't create the cash. Someone still has to provide the $75–100K. But from a capital provider's perspective, they'd be putting $75–100K into an asset worth roughly $250K with only ~$45K ahead of them, which is a very different risk profile than what most lenders are looking at when you ask for a small second mortgage. And since your plan is to deploy the funds into 6–9 month flips and recycle/pay the capital back, I wonder if the better solution is a private capital facility tied to the rental equity rather than a conventional HELOC.

You’d definitely want an attorney and CPA involved because of due-on-sale, lender consent, title, tax and entity issues, but I’m curious what the lenders and creative-finance people here think.

Maybe the answer isn’t finding someone willing to make a $75K second...maybe it’s finding someone willing to provide $75–100K against a very low-leverage asset with substantial equity protection...

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Paul Crosby II

Lender · Columbus · Member since 2020 · 64 posts · 103 votes

21h

Kris, getting Wells Fargo's written consent for a junior lien is the right first step, and I'd get the same confirmation in writing on the other first before you spend money on an appraisal. Once consent is clear, price three structures side by side: a second behind both firsts, either one lien per building or a blanket across both, and a cash-out on just the smaller-balance building so the cheaper first stays put. Compare them on the blended cost of the new money, fees, draw versus full funding, and whether the lender qualifies mainly on the rent roll, since a bank-statement product can still tie back to your personal income. A blanket can help clear a lender's minimum loan size, but it also cross-collateralizes both buildings, so only use that if the flexibility trade-off is worth it.

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How to pull equity from 2 fourplexes that have a 3% & 4% mortgage rates??

How to pull equity from 2 fourplexes that have a 3% & 4% mortgage rates??

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