Can I extract equity from multiple properties?

Question

Hello,

I'm curious, I own two separate rental properties. I bought them cash so I have 100% equity in both. They are worth about 40k each. I rent them out for $650 each a month for a total of $1300 a month. Is there any way I could get a HELOC for both properties on the same loan in order to get a HELOC for 80k?

What would be my best way of extracting equity from both properties?

Thank you for any help in advance

Tyler Flagg · Answer

Hey @Ryan Roundtree I just went through this process myself recently. Bill is right that you won't be able to do a HELOC. However, I was able to do a Business Line of Credit (BLOC) in order to extract equity.

Talk to a few small local banks in your area. Avoid the big names if possible.

Ask to speak to the commercial lending department and see if they would be willing to do a business line of credit for you. I was able to get mine at 80% LTV. So you'd be looking at a line of credit worth 64k...minus fees of course.

Before you go, check out this BP blog post about getting your loan approved. It's pretty neat.

Best of luck!

Bill Gulley · Answer

Home Equity Lines of Credit are owner occupied loan programs, a lender may advance a line of credit on a rental o commercial property, that depends on the lender, but that is also in the commercial loan arena, not a HELOC.

Your properties are probably worth less than minimum loan amounts making a cash out refinance tough to do. But, what you need to look for is a "blanket loan" where more that one property is used as collateral. My guess is that a lender might go to 70% LTV, giving you about 56K as a loan. Ask your bank. Good luck :)