LOC on investment properties

[Spencer Fry]

I have a few properties that are owned outright. Total value somewhere around $1mill-$1.25mill in equity. I am seeking to obtain a line of credit for these so I can tap into that dead equity. My local banks will only do a heloc on a primary residence. I've heard of other people doing this, but I am not having any luck finding a bank to work with. Hoping you guys with experience can chime in and help a guy out.

Thanks in advance! 

[Patrick Roberts]

There are a handful of investors offering nonQM investment property LOCs that are more like hybrid LOC/cashout loans. In my opinion, you're better off just using a cashout refi and then parking the money in a MMA/HYSA or rolling 30-day treasuries than using these hybrid LOCs. Another option is to cashout refi, park the cash in CD's with decent yields at a local bank/CU, and then borrow against the CDs as needed. Typically spreads on loans collateralized by CDs are around 200 bps. This would basically create a synthetic Heloc.

Some small local banks are offering commercial LOCs on investment properties, but the rates I've seen on these are north of 10%, have low LTVs, have to be rested once per year, have to be renewed every 2 years, and are callable. Whether any of these options make sense will be determined by your use-case.