Trouble Finding non-owner occupied HELOC (3 family and 5 family)

[Andrew S.]

Hi All - 

I could use some serious help and I'm starting to get frustrated. I have substantial equity tied up in two investment properties (a 5 family commercial property and a 3 family residential property) which I would like to access through HELOC products. However, I've called a range of lenders (banks), small and large, and so far none of them are willing to issue a HELOC for non owner occupied investment properties. Both of my properties have existing mortgages in first position and the existing first mortgage lenders are recommending a cash out refinance. I'm reluctant to do a refi since I have great rates locked in and I'm not 100% sure when I will need access to the credit lines from the HELOC, plus I'd rather avoid increasing my payments until I need the money. I'm hoping that some of the experts here with more experience and knowledge in this area could point me in the right direction. I don't think the intended use of the HELOC should matter, however, I am hoping to use the credit line to finance new business opportunities . . .

Thanks in advance,

Andrew

[Andrew Postell]

@Andrew S. ok, thanks for giving me those numbers.

On your 3 family property you are not going to find a Line of Credit for that property. In general, lenders stop providing "cash out" or "LOCs" at 70% LTV on a 3-4 unit. I would not expect to find a solution for that property.

Your 5 family property is another story.  You have lots of equity there.  I would suggest 2 things:

1. When speaking with a bank use the term "Line of Credit" over HELOC. I know they sound similar but trust me, using Line of Credit will get you to the commercial department and HELOC is for residential homes (meaning your primary home). So the bank may not even be routing you to the right person by using the term HELOC...even if you explain it's on an investment property. Just trust me on this...sometimes banks are dumb.
2. Post in the Connecticut and the Commercial forums here on Bigger Pockets that you are looking for a Line of Credit on a commercial property and see if anyone has any suggestions.  In the CT forum use the actual city.  Keep this post here too but I think you will have more responses in the other forums based on the property type.

Good luck!