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Updated almost 5 years ago, 01/08/2020
Rhode Island Home Equity Line of Credit (HELOC)
I'm looking for a bank that offers a HELOC on an investment property. I did a little research and consensus says to check more local banks. I found one that does, but now they are saying they must be the 1st lienholder as well. Anyone out there with any success in this situation? Thanks in advance.
@Mo Um I can't recommend a specific bank because it's been a while since I've gotten a HELOC, however I see 2nd position HELOCS all the time when I research properties, including investment properties.
I'd recommend just continuing to look around, they are out there - and the recommendation to try local banks and credit unions is a good one. (Now, the maximum LTV might not be to your liking, but that's a separate question :)
I will keep my eyes open and update this thread the next time I come across an obviously investment property (not-OO) and a 2nd position HELOC. But off the top of my head, I feel like maybe I've seen Citizens with liens in that position recently? Might be worth trying them, if you haven't already.
You could also ask in a local real estate investment group such as RI Real Estate Investors Group (RIREIG) or Black Diamond REI. And you could also try to find private lenders either in groups like those, or from friends and family - though a HELOC is slightly complicated and maybe a little tougher sell for friends and family (since the payment could change).
I always have mixed feelings about mortgage brokers. Many times I've used one, only to find out that they ended up getting me a loan with a local bank I already knew / had a relationship with anyway (so I felt kinda silly paying them a fee for something I could have found myself).
However in a situation like this, where you're trying to hunt down a rarer-than-you-thought type of loan, it might be worth contacting a mortgage broker. They could turn a challenging loan hunt into something easy. For a fee, of course :)
Thank you. Greatly appreciated
@Mo Um
I’ve got a few banks that I regularly use. I don’t mind connecting you if that’s the direction you decide to go in. I haven’t found a bank that will extend a loc without also having a first position though.
I think Centreville Bank does it. I have to get clarification. The sales representative said they do but sounds too good to be true. Ive called more than a handful of banks and none offers it, unless owner-occupied or 1st lien. I will have to call Centreville again and see if I can get a new rep that will tell me the same thing lol Fingers crossed. Thanks!
I know that Centerville has hired a bunch of new people and that they are aggressively trying to expand, institute new programs, and bring in new business. They are definitely on the move and worth looking further into.
Hey guys, good to see other investors from Rhode Island. I am kind of in the same situation as @Mo Um, as in I am trying to find a solution to my financing problem. I have been a student for the past couple of years, so i have no capital free to invest, but I'm itching to get into rental property investing, and have even found some deals, but lacking the funding havent gotten anywhere. I was personally thinking of looking for a bank to get a personal line of credit with? Do you guys know of any banks in RI that do large lines of credit (50k up)? I was thinking of using this for BRRRing some properties as well.. @Brandon Ingegneri @Anthony Thompson any help would be appreciated.
I think you may find it hard to find an unsecured line. That is typically something that develops later in a banking relationship. Typically a line is going to be attached to a collateralized asset. At the very least, you’ll need to have an account at the bank and have done some business with them. I’d start with getting a traditional loan first if possible. Then you can expand from there.
The only exception to the rule is a municipal credit union where a particular employer has a relationship with an institution and those employees have those benefits available to them. Other than that, I think the line is secondary in the banking relationship.
@Luigi Raineri I'm not aware of any banks that will do an unsecured personal loan / line of credit for 50K+.
I do know some credit cards that will give you, depending on your credit, tens of thousands, but you have to be careful how you use that because you'd want the regular purchase rate (if possible) not the much more expensive "cash advance" rate. So that's something to research if you're going to use a credit card.
If you don't have, or think you can get, such a credit card because your credit isn't that good, that that would also have been an issue in the case of an unsecured loan from a bank.
Keep in mind, if you apply for most residential mortgages, they are going to look back a couple of months and scrutinize your source of funds, not to mention it will also throw off your credit ratios when applying for a mortgage as they'll see the new debt and its balance and payment will count against you.
A better option would be, if you think you've actually found good deals, to 1) get them under contract and sell the deal for a fee to another investor (i.e., wholesaling), or 2) come to some kind of partnership / joint venture agreement with another investor or friend/family who wants to get into RE investing like you.
Both of those would be ways to make money off of real estate knowledge / hard work finding a deal, without having to have any capital of your own. That's why wholesaling is often promoted as a way for new people who might not have a lot of money, to get into real estate. If that interests you, there are a lot of wholesaling resources here on BP, of course.
Thanks for the quick answers guys! I appreciate the help.
Luigi - I would be most mindful of debt/income ratios if looking at a personal loan to fund asset purchases. The personal loan may provide you the up front capital, but be prohibitive from a debt standpoint. Don't want to shoot yourself in the foot.
On another note - anybody else here have luck securing a LOC on investment property in RI? I am looking to do the same.
I was able to get a HELOC on a rental property from PenFed last year, so unless that's changed I would go to them. You need to sort of donate a small amount or something to become a member, but it's super easy and then you can get a HELOC on a rental.
And TD Bank gave me an unsecured personal line of $50K without ever using them before, so I would try that if you're looking unsecured. We have great credit, high income, cash flowing rentals, low DTI and credit usage, etc. so I obviously can't vouch that you will have the same experience, but I can tell you for sure it's out there. Good luck!