2nd mortgage or HELOC on investment property in NJ

[Chris Turek]

I’d love to get some ideas on how to get equity out of an investment property.  I have an investment property worth ~1m with a note on it for just under 500k.  The current loan is 3.5% so I won’t refinance into a new mortgage.  I would like to take 200k out of this property to purchase a new investment property.  Does anyone have any ideas where to start.  

Thanks

Chris 

[Devin Peterson]

Hi Chris,

You most likely would end up having to use a DSCR cash out. Here's why:

- unless you strategically reported your taxes as making 100% income and not reporting an entire loss on your schedule e - you will most likely not find a lender who will qualify you for a HELOC. As far as I know, DSCR HELOCs do not exist and most of the trust worthy outlets I'm also aware of put 2nd HELOANs (DSCR) on pause. HELOCs and HELOANs do exist for rental, but with prime so high and secondary tier of LLPAs associated with these programs you'll be above 10-11% all day. And again, that's if you can qualify with traditional income.

- DSCR cash out refi is most likely going to be your best bet. I know the sub 4% rate is attractive for multiple reasons but the Covid golden handcuffs are a problem for a lot of people. You should be able to get 75LTV cash out no problem.