HELOC on multiple properties?

[Stan Hill]

Greetings all:

We own 3 rental properties in the Dallas area, paid for free and clear. They are held in an LLC. Total value of all three is about $150,000. I want to tap the equity in these properties to build a rental house on a vacant lot and/or do some low end property flips.

Does anyone have any advice, or know if it is even possible, to borrow against equity in three separate properties? Income/debt ratio-wise, we should qualify for the maximum 80% LTV and can personally guarantee the loan with credit scores in the mid-700s.

Should I expect to pay a higher rate than the mid-3s I am seeing for a single property HELOC?

Any advice on lenders and what kind of rate to expect would also be appreciated. 

Thanks,

Stan

[Hattie Dizmond]

Stan,

You're HELOC will be 3 separate HELOCs, one for each property. Therefore, there is no reason, as long as your debt to income ratio will support the leverage for each transaction, why you shouldn't be able to get a HELOC against all 3.

As for the interest rate... I can't begin to speak to the interest rate. There are too many factors at play and it's completely dependent on the lender. My personal recommendation, based upon my banking background not my REI experience, would be to work with a local portfolio lender. You're more likely to get the best possible rate, plus you may be less likely to get a higher rate for HELOCs 2 and 3 in this "big bang" approach. It's also a great way to start building what could turn into a very valuable relationship with a local lender. Just sayin'! :)

Get the HELOCs, do the deals successfully and service those HELOCs properly, there's a good chance you might not have to ever use a HELOC again. Local portfolio lenders, because they have their own underwriters - usually right down the hallway from the lender you now have a track record and relationship with - have a lot more latitude than the big banks/originators. They will lend based upon track records & relationships, because they have that flexibility.

Hattie