How can I get a HELOC on an investment property?

Question

So, I live on the west coast and am on the title of a property on the east coast (specifically, in Georgia) worth more than all of my other assets combined.

It's occurred to me that if I had that cash available, I would easily be able to purchase properties without needing to use hard money lenders. (I have been buying properties cash, then refinancing, butI am limited by my funds to very small properties.)

I went to a local national bank (since my local lenders can't give loans in Georgia), and was pretty much told that "no one" will give a HELOC on an investment property. They can do a cash out refi and give me 75% LTV, which is fantastic, except:

* $4k origination fees
* Obviously, I will be paying interest on the full bulk at all times, even when I'm not using the money or only using half of it.
*Interest will be higher than usual because it's a cash out refi on an investment- they tack 1.5% on top of the going rate, so it ends up a little below 5% interest.

So...no.

My next step is to start googling and calling random mortgage brokers in Georgia. But I wanted to ask your view.

Is there any way to get a HELOC on an investment property?

If not, do you think it's worthwhile to shop around for a cheap <4% interest 30 year cash out refi to have the money to invest? I'd love to have the HELOC, I'm extremely skeptical about doing a full refi because I don't want to be paying interest all the time.

Jennifer Lee · Answer

we got HELOC in 2008 for our paid in full in boston, through Bank of America in NC. the manager knew it was a rental. but we have "great" credit and have rental income cashflow with BoA a/c for 2 yrs already then. 
maybe bc we only took less than 50% of equity

Johann Jells · Answer

I also have one with a local bank on a commercial property, but the rate is 6.5 last I checked. We really only use it as a "cheaper than credit card" bridge loan if we're low on cash. Most properties here are higher than the $150k limit on the line, so we gain little with the ability to make a cash offer using it.

Sam W. · Answer

I have two HE LInes of Credit on two investment properties...they are through Huntington National Bank for 80% of the CTLV (I have 1st mortgages on each).  Huntington did not finance the 1st on either property.  There were minimal fees involved.

While I know you said you were not successful with an earlier attempt, I would think it should be relatively easy for you to get a HELOC for your property.

Bottom line answer to your question is that yes, banks do extend HELOCs to investment property.

Pat L. · Answer

Up here Citizens Bank would do it for a SFH we have LTO.
I just wanted to strip the equity 
But the fees etc were the killer, however, it was checking account access to whatever you needed to take out. Interest accumulated on the outstanding balance only.

Will Browm · Answer

I asked a similar question last month. I own two homes in GA also. I found no one with HELOCS for paid off investment homes. I am not interested in closing costs, fees and paying interest on funds I don't need immediately. Hopefully this will change in the near future.

Bill Worsley · Answer

Chris - it might be worth exploring whether a commercial lender with a local community bank in the market where there property is located would consider doing some form of an operating line of credit.  Challenge here is the fact that you are personally located in California, not Georgia.  Would be worth a few calls to explore this option.  Good luck.

Daniel H. · Answer

You would think that would make it easier to get the HELOC since the property is paid off.  There has got to be a bank out there somewhere that will do it.  Try some regional banks in that area.

Steve Babiak · Answer

Wells Fargo might be one to do a HELOC on investment property, but at rather low CLTV.  But might be better than nothing.

Do a forum search - this has come up quite a bit.

Chris H. · Answer

Daniel H. : There is no mortgage on the property.  It is fully paid off.

Daniel H. · Answer

I think your best bet would be to go with the lender who has the current mortgage on the property.  Did you contact them yet?