All Forum Posts by: Alfredo Cardenas
Alfredo Cardenas has started 4 posts and replied 22 times.
Post: HELOCS on Single Family Investment properties
- Posts 24
- Votes 7
Hello,
I am looking for at least $400K or 350K in a line of credit or HELOC. I do have plenty of equity on all the rental homes. I don't have a primary. I currently rent because I moved here to open the business.
Post: HELOCS on Single Family Investment properties
- Posts 24
- Votes 7
Quote from @Patrick Roberts:
Helocs on investment properties are hard to find, and even when you do find them, they tend to be more like hybrid Heloc/Closed-End Seconds than true revolvers. As an example, Angel Oak offers a Heloc for investment properties, but they require a significant draw at closing than cant be repaid for a year (I believe it's a year).
There are a few wholesale lenders like A&D Mortgage and Deephaven that are offering DSCR 2nd position liens right now. These are closed-end seconds, though, meaning that it functions like a cashout - you get the full loan amount at closing and then it amortizes until repaid. These arent terrible products in select use cases.
Some smaller banks will offer commercial lines of credit secured against investment properties. These tend to require resting every year or so, so this may or may not work for what you have in mind.
Thanks Patrick. Angel Oaks seems like a better solution. I will require a significant first draw at closing. I just don't want to draw the entire amount at closing. Do you have their contact info?
Post: HELOCS on Single Family Investment properties
- Posts 24
- Votes 7
Quote from @Lauren Robins:
Hi Alfredo!
Your situation is very relatable for many investors who have locked in excellent mortgage rates on rental properties but now need liquidity for a new venture. Given that your properties have substantial equity, a Home Equity Line of Credit (HELOC) is indeed a strategy worth exploring—especially since you want flexible access to capital without disturbing your current low-interest first mortgages.
Traditionally, HELOCs are easier to obtain on primary residences, but they do exist for investment properties, including in Florida and Texas. However, they are more niche products, typically offered by portfolio lenders, local credit unions, community banks, and private lenders rather than the big-name national banks. Not all institutions offer HELOCs on non-owner-occupied properties, and those that do usually offer lower loan-to-value (LTV) limits—often in the 65–70% range. Expect interest rates to be higher than owner-occupied HELOCs, and underwriting will be stricter, especially given that your current income is from rental properties only.
Your decision to avoid a cash-out refinance is well-founded. Replacing a sub-4% mortgage—especially one as low as 2.8%—with a new loan at current rates (which are generally 6.5–7.5% or more for investment properties) would be a substantial financial hit, not just in monthly payments but in long-term cost. You’re also correct that a cash-out refi feels similar to selling part of your equity at today’s costlier rates, which is rarely appealing when your existing loans are this favorable.
Given your preference for a credit line structure, a HELOC is ideal because you only pay interest on what you draw, and you can reuse the credit line as needed. This flexibility is especially useful when launching a business where cash flow may be uneven in the early stages. You’ll want to shop around specifically for HELOCs for investment properties, and you may have better luck getting approved on the home that already has a HELOC, as the lender has already demonstrated comfort with a second lien position.
One challenge, however, is that your sole income from rentals might limit your borrowing power, especially with traditional banks. That said, your good credit score (700+) and strong equity can help you qualify with portfolio lenders or DSCR (Debt Service Coverage Ratio) lenders, who focus more on the cash flow of the property rather than your personal W2 income. These types of lenders are used to working with investors and may offer HELOCs or interest-only credit lines secured by investment properties.
You could also explore a Business Line of Credit or SBA Express Line once your business is formally established. If you're forming an LLC or S-Corp and can project reasonable income (especially with 25+ years of experience in the field), some banks may offer you a line of credit secured either by business assets or real estate. In some cases, you can even get a business-purpose HELOC backed by your investment property, which can keep it cleaner for tax purposes.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
Thank you Lauren. Do you know any specific lenders that offer DSCR HELOCS or interest only credit lines for Investment homes? The most important thing is that it is a credit line or HELOC so I don't have to use the entire available amount at once when it is not necessary.
Post: HELOCS on Single Family Investment properties
- Posts 24
- Votes 7
Hello,
Need some advice. ...I have 3 rental single family homes. Two in Florida and one in Texas. All of them have a mortgage and one of them has a HELOC on top of the mortgage. All of them have plenty of Equity (even the one with the existing HELOC). My needs: I need cash to open a business (which I have over 25 years of experience on). My hesitation: All of the homes are under 4% interest rate (the biggest one is at 2.8%). Question: Is there such a thing or product as a HELOC on investment homes in FL & TX? Why a HELOC instead of refinance you may asked? For once, i may not need all the money but I sure need to have it immediately available just in case I need it. I don't want to pay a fixed high monthly payment when i may not need all the money at once. Issues: My only income right now, as I am getting close to open the business, is my rental income which is very good for just 3 homes. My credit score is over 700 (not sure by how much is over 700). Any ideas of what my options are or what products are out there to fit my situation? Again, I prefer a credit line type of product or HELOC. if someone suggest cash out refinance, I see cash out refinancing the same way as selling the home without the fees associated with selling. On top of that, the bigger home is at 2.8% rate right now.
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
That's right. My wife alone meets the 750 hour of Reps and we combined meet the Material participation. I totally understand those rules.
My issue or complication is not that part.
The issue is that I have several moving parts in 2024 happening and I am not sure which way to go. Kory is saying that, if i choose the REPS route this year, I cannot use my 200K passing loses in 2024 to offset the capital gain of the 3 homes i sold this year. Additionally, I know that I can't use those 200K prior losses to offset W-2 via REPS. If I dont claim REPS this year, then I will be able to use the 200K prior losses to offset capital gains o the sale of the 3 homes.
I guess I save more money by not claiming REPS this year which is a shame since my W-2 next year will be less than 100K. I thought that I could do both of the following when using REPS:
1- Use my 200K prior losses to offset the capital gain of the sale of the 3 homes
2- Use Reps this year and cost seg my remaining 3 homes to offset W-2 via REPS.
But, according to what Kory said, I cant do both at the same time.
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
Hey Kory,
Thank you for the explanation. I am in a odd spot and need to decide what to do but it is complicated. Here is exactly where i am at:
1- I had 6 rental homes as of 2023 with a overall passive loss of $200K from those 6 rentals carrying over to 2024. My W-2 for 2024 is over $250K which is the reason why i want to use REPS and MAterial Participation in 2024 by doing a cost seg to offset W-2.
2- In 2024, two things happened: I married my wife who is a realtor and I also sold 3 of the rental properties which created a capital gain of $220K (one rental was a loss).
Are you saying that if I go the REPS route and combine all rental activity, I wont be able to use the $200K loss carrying over from prior years to offset the capital gain of $220K (sell of the 3 homes in 2024)? and that I can only offset my W-2 by the loss created in 2024 by doing a cost seg on 3 homes left? so, one or the other but not both?
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
What I read and understood from another source is that my wife has the 750 hours needed to qualify for Reps by herself (since she is in the real state business as a realtor selling and buying homes for her clients). Then, material participation (500 hours) is only related to the activities or time spent managing my rentals which we can combined (combined our hours spent in the rental activities of my rental properties). Reps and Material participation are two different activities. She qualifies for Reps (750 hours) on her own and the 2 of us combined get to over 500 hours of material participation.
I think that's how it works. Can anyone confirm this?
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
Yes. Thats what I learned but please ask the experts
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
Hello, yes, there are all long term rentals. I keep reading and I learned that prior year passive losses "can not" be unlocked to offset current year W-2 income via REPS if me or my wife became REPS in 2024. I can use past losses to offset current year capital gains but I can not use them to offset income in 2024. I can only offset w-2 income with losses of the current year in which my wife became Real state.
Post: Reps Status (via wife) & Material Participation to offset W-2
- Posts 24
- Votes 7
Thank you