I want to do a HELOC on my Primary....but the lender says I can't

[David Vitarelli]

Hello All! I am the proud owner of 3 rental units in Philadelphia, PA. I am looking at ways to generate capital, to reinvest in real estate, from the equity I already have in my primary residence. I am not certain of the cost of my next real estate investment so, naturally, a HELOC appeals to me. The issue that I am having is that my present primary residence is a multi unit property. I live on the 2nd and 3rd floors and I rent out the 1st floor to a home health care business. Now here is where my situation gets tricky, this house is zoned 20% commercial 65% residential 10% Multi Family and 5% other. Its specific zoning classification is "C2". Most lenders that do strictly residential say that they cant help and lenders that lend commercial say that it is not a commercial loan due to the small percentage of commercial zoning. Is there any one other there that can help me accomplish a HELOC on this property in Philadelphia, PA? I would like to get any and all input on this topic!

[John Matthews]

@David Vitarelli So I don't know much about your specific situation, but how many banks have you been to? If you haven't been to any / many local / community banks, I'd recommend you give them a shot. Philadelphia Federal Credit Union has worked well for me, if you're interested I can put you in touch with the business loan officer I've worked with in the past.

That said, I do know that most banks don't like to be secondary to someone else's 1st position loan. Basically if you default on the 1st position loan, they can foreclose and essentially wipe out the 2nd position loan, and the only way to stop it as a 2nd position lender is to buy out the first position loan. So you may have to refinance to work with another lender. I know PFCU does business lines of credit on their own loans.