Question about using home equity loans on investments

[Phil Jones]

Hello all!

I wanted to do more with my real estate investing, and I have a significant amount of equity in a home I bought over 10 years ago. I live in there part time due to work, and rent out the other two rooms. I recently purchased another home as primary resident in another city. 

I had an initial conversation with a loan officer at a local credit union about getting a HELOC or loan on the first house, and she asked me if I had tenants. When I told her I did, she said that property was ineligible for a home equity loan because it is considered an investment. When I asked her if this policy was specific to their bank, or if it was a law, she said it almost all underwriters will stop the loan. 

I've heard many people on BP talk about using refinance and home equity as a source of capital for investment, and it might not have been as easy as I thought. I'm curious to see what your experience has been and how someone can go about getting equity out of an investment property. 

Thanks in advance!

TL;DR: Tried to get home equity loan on investment property, was told it's not possible to get home equity loans on investment property. 

[Dan Schwartz]

What's your LTV?

Credit Union West will open a LOC up to 80% LTV (max $40-50k, I think) on an investment property held in your own name. If it's in an entity, it needs to be out of it for 6 months this.

Bank of the West will open a LOC up to 60% LTV on an investment property held in personally or in an entity.

PenFed will open a LOC up to 80% (one rep said 70% over the phone, but underwriting says 80%) on an investment property held in your name. If it's in an entity, it only needs to be placed in your name prior to closing the loan. You can own only three properties max when opening this LOC.

That's my research from earlier this year. I've worked with all three banks now. Good luck.