HELOC’s on investment property during COVID

[Kyle Castaneda]

Hello All -

I currently own an investment property and have 70% debt-to-equity in the house. Given this, I was planning on opening a HELOC on it in order to use the funds for a down payment to purchase another investment property.

The problem I'm running into is that a lot of banks have either stopped accepting applications for new HELOC's on investment properties, or they've stopped accepting any new HELOC all together since COVID lockdown began March 2020.

Given I have had no luck at all finding a bank that will accept a new HELOC for my investment property, my father had the idea of me taking a loan from his existing HELOC and making the payments for him. Essentially, I would be gifted the funds from him and I would be paying the monthly bills for him on the HELOC.

I have 2 questions:

1. Has anyone opened up a new HELOC on an investment property in the past 8 months? If so, what bank did you use?

2. If I go the route with my father loaning me the money, does that mean he will have to be included on the title for the home as well? 

[Bernadeau C.]

Hey Kyle, Here are my thoughts.

1. I am currently going through the process of a HELOC on an investment property with Penfed, i believe they require 80% CLTV.

2. he doesnt have to be on the title necessarily, you could have a separate promissory note drafted up with the terms of the loan so its more legit. keep in mind the promissory note would not be recorded by the county but it would show that you are serious in paying back the loan. 

Best of luck,

-Bernadeau