Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Starting Out
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 6 years ago on . Most recent reply

User Stats

29
Posts
9
Votes
Daniel Soovajian
  • Vancouver, WA
9
Votes |
29
Posts

Appraisal needed for HELOC?

Daniel Soovajian
  • Vancouver, WA
Posted

Hello,

About 7 years ago, I purchased a condo from a family member for $50k and after living in it for the first few years, have been renting it out since then. Based on what I see the other units selling for and the condition of that property, my unit should be able to sell for about $125k. I'm trying to figure out the best way to tap into that equity to fund BRRRR investments going forward and one of the options I'm considering is a HELOC.

My question for BP is: what value of the property should I expect a lender to allow me to borrow a % of? I haven't paid for an appraisal on the property since it was purchased years ago so I'm not sure if I should expect to borrow ~75% of the $50k I paid for it years or something closer to its actual market value. From what I understand, HELOCs don't require an appraisal so does the lender just use some other tools to approximate the property's value? 

Most Popular Reply

User Stats

5,116
Posts
5,171
Votes
Kyle J.
  • Rental Property Investor
  • Northern, CA
5,171
Votes |
5,116
Posts
Kyle J.
  • Rental Property Investor
  • Northern, CA
Replied

The appraisal is based on the current market value of the home, not what you purchased it for.

The banks I've got my HELOCs through (which were also on rentals by the way) both required appraisals.  So don't pay for your own appraisal because the bank will still likely require one of their own.  Some charge for it, some don't.

Most lenders won't do HELOCs on rentals. Some will obviously because, as I mentioned, I have them. When you find the ones that will, it's common to see lower LTVs than you can get on owner-occupied properties. The highest I've heard of is PenFed at 80% LTV. Other banks (i.e. Wells Fargo, Union Bank, etc) are usually much lower (60-65% LTV).

I'm not sure if you'll run into any additional hurdles because the property is a condo vs a SFR. You'll just have to call around and start talking to some lenders to find out.

Loading replies...