What are my options for getting equity out of a rental property

Question

Hi, I’m a new member and this is my first post so thanks in advance for your help. I have rental property in NJ that I owe about $750,000 on and its current value is about $1,300,000. It’s 2 unit and I was living in it initially so my rate is 3.75%. I purchased it over 5 years ago. I’m considering purchasing another property to rent out. I would like to get an idea of how much equity I can take out of this property and what type of loan to use. I would hate to refi and give up that rate.

Thanks

Chris

Thanks

Chris

Phillip Davis · Answer

I was told by my lender that huntington is the national leader in investment properties helocs and one of the few bigger banks that will. I am working with a huntington in michigan currently that will do a 75% ltv  heloc on one of my rentals and no appraisal or origination fees.

Diana Muresan · Answer

@Chris Turek loan limit for 2 units in Hudson County is $870K so you will have a jumbo loan, investment property and a cash out pending on how much money need to pull out. You monthly payment will go up quite a bit. You need to put down the numbers and see if it makes sense to keep it. No one would really do the due diligence for you as we all have different business strategies. I would personally. I would personally sell it instead of pulling out cash

Chris Turek · Answer

Thanks everyone for your feedback.  A couple people mentioned Huntington so I called them and they don’t do lines of credit in NJ.  They only do them in states where they having a bank branch and apparently they only have a mortgage office in NJ. @Diana Muresan I owe but 750k on the property its worth 1.3 -1.4 taxes and insurance are about 22k and annual rent roll is about 84k.  I lived in the property for 2 years and did a partial renovation.  It’s in Hoboken which is a strong market so I’m inclined to keep it but would consider selling if someone could prove to me that made more sense.

Thanks

Chris

@Phillip Davis thought I would mentioned you because of Huntington

Diana Muresan · Answer

@Chris Turek could you walk us thru the numbers just so we can see if is even worth keeping this duplex with such high mortgage. What are the rents, and what is the tax, ins and mortgage and what do you expect your mortgage will be lets say at 70% LTV cash out on a regular refi.

Phillip Davis · Answer

@Hoseah Njuguna I have had a great experience thus far with huntington, i actually set up a business account with them as well to further enhance the relationship with them. I would give a recommendation.

Hoseah Njuguna · Answer

@ Phillip Davis, how has your experience with huntington been? I have two investment properties that I own 100% and would be nice to pull some cash out for more acquisition.

Tim Johnson · Answer

I would check with some lenders in the area.  In michigan your only options is a cash out.  To the best of my knowledge you can't do a HELOC on investment property. But I would call a couple local credit unions and see if they can

Marc Dube · Answer

@Chris Turek

Do a home equity and keep your rate. Your loan to value may be lower because it’s non owner but you could probably go at 75-80% of the value

Jake C. · Answer

BofA offers 85% LTV on a HELOC. 75% sounds more like commercial loan LTV. There is no "difficulty" other than having the appraisal they commission equal what you think it should.

Start talking to banks.

Jessica Freesia · Answer

A second mortgage is going to require you to make monthly payments on an amount that is given to you whether you need the money right then or not.  A HELOC allows you to borrow money as you need it from an approved account, and you pay back what you need to when you use the money.  For that reason I prefer the HELOC.

My HELOC lender would have allowed me up to 90% on my primary residence, but the rules might be different on a duplex (they might not let you take out as much).  The rules are going to be set by the bank, so you will have get in touch with each one to find out.

Are you still living in it?  Others can chime in, but if you've moved out I think getting a HELOC on a rental become much harder.  Good luck to you!

What are my options for getting equity out of a rental property

Most Popular Reply