What is the Process for getting a HELOC on an Investment Property

[Andrew Katz]

I'm looking to do a third house hack/BRRRR in the next 2 years. I plan to utilize some cash, margin loan, 401k loan, and a HELOC as a down payment.

My first house hack (now an out of state investment) has a Zestimate of $530K, and I have $266K left on the loan. Assuming I get an appraisal of $500K, I have ~$110k (75% of appraised value minus the loan) I could tap into for equity for a HELOC.

Question: What is the process for getting a HELOC?
Folks say use a local lender. Is that local to me? Or local to the property?
Do I get the appraisal? Or will the lender do that?

[Chase Olson]

Hey Andrew, i found the heloc process to be very simple, my local lender did 95% of the work for me! Location shouldnt matter too much for the lender. My lender did not need an appraisal for the Heloc, but yours might. First step is to find a lender you would like to work with and just ask them!

[Leslie Bole]

The bank I work at would require the property to be close by. Because it is an investment property, you would pay all fees, including appraisal. And the big kicker is we would only do it if you had the first mortgage with us already. My bank tends to have more restrictions than others, but this hopefully helps as you shop around.

[Andrew Katz]

Thanks @Leslie Bole and @Chase Olson. I actually went to a REI meetup yesterday, and I was able to find a lender to help me out.

[Devin Peterson]

Quote from @Andrew Katz:

I'm looking to do a third house hack/BRRRR in the next 2 years. I plan to utilize some cash, margin loan, 401k loan, and a HELOC as a down payment.

My first house hack (now an out of state investment) has a Zestimate of $530K, and I have $266K left on the loan. Assuming I get an appraisal of $500K, I have ~$110k (75% of appraised value minus the loan) I could tap into for equity for a HELOC.

Question: What is the process for getting a HELOC?
Folks say use a local lender. Is that local to me? Or local to the property?
Do I get the appraisal? Or will the lender do that?

Short and sweet here: There are no true DSCR HELOCs. There are HELOANS - at that juncture, your best bet is to evaluate what is called the blended rate and compare that to an entire new first lien (cash out). IF you have super strong income and you and have a lower 1st lien, lots of equity - MAYBE your best bet is using a local bank or CU to get most competitive HELOC inv terms. If your bottom line numbers on tax returns and W2 income are not strong however, this will be an abrupt dead end. Good luck!