Can you take out a HELOC on an investment property in Texas?

[Betson M.]

Hello All,

I recently moved to a new house and decided to rent my old one. I wanted to see if it's possible to get a HELOC on the rental property to buy another one? I refinanced to a mid 2% rate a few years ago and did not want to do a cash out refi. If HELOC on an investment property is not an option, is there another way to pull the equity for that property to buy another investment property?

I'm located in Dallas, TX. 

[Jason Wray]

Betson,

You are probably better off using a DSCR program to take the cash out at 75% LTV. A HELOC is going to be a nightmare and offer in most cases 60-65% CLTV (If you find a bank) that will do Heloc investment. If you do be prepared to have a rate of 9.50% or higher which in most cases would be a higher payment than if you simply refinanced and lost the 2% rate.

You may also have road blocks with a HELOC that a cash out refinance would not have due to cash in hand and one loan. A HELOC cannot be used as Reserves or assets and PITI assets are required when you buy more REI.

When you look at the blended rate having a HELOC and a 2% rate again it usually causes a higher payment over a simple refinance. Heloc is generally 10 or 15 years amortization verus a 30 year mortgage with the lower payment.