HELOC on a investment property

[David Marsh]

Hello,

I have been trying to open up a HELOC on a investment property I have. The lender that has the mortgage doesn't do HELOCS on investment properties and I have reached out to a number of other lenders seeing if this is possible. So far I've only been told that I would need to do a second loan on the property and it would technically be a HELOC. Is it possible to open a HELOC for a rental?

Property is in Wisconsin and the only reason I haven't done a Cash out Refi is because the loan rate is at 3%

[Jason Wray]

David,

I run across this every day and you will find maybe 1-2 lenders still offering a heloc on an investment at 60-65% LTV. Problem is the rate will be 12-15% and that is not on a 30 year term its usually a 10-20YR term. So when you actually calculate having a 3% first mortgage and a 12-15% second/heloc its more expensive. You are better off doing a cash out refinance and taking a 7-8% since it offers a 30 year mortgage for the lower payment.

If you look at it for the long term you will have acquired another investment rental with positive cash flow and tax benefits. Then in 12-24 months you refinance and lower the rate back down to a reasonable rate you are ahead of the game.

"Marry the house, Date the Rate"...