HELOC on Rental Property

[Jackson Tate]

I've read that getting a HELOC on a rental property can be much more difficult than your primary residence. Has anyone worked with a lender that does HELOCs on rentals?

[Andrew Postell]

Hi @Jackson Tate @Joe M. @TJ Joseph and @Keith Perkins this is such a common topic and your responses are pretty standard.  The answer here is simple...but challenging for sure.  

As mentioned above a small, local lender will be your HIGHEST probability of success when trying to find "Line of Credit" lenders on investment properties.  The unfortunate thing here is that investment properties foreclose at a higher rate than primary homes so many banks just don't want the exposure to this.  But it is 100% possible to find but you have to put in the time or at least know someone that ALREADY has the connection.  Here's my 3 suggestions:

1. Post in the Bigger Pockets STATE forum that you are looking in.  There are usually some good, local investors that monitor those forums.  Maybe they already have a suggestion or recommendation for you?  Certainly try there.
2. Visit your local REI groups. There are many groups that meet across the country. Some post here on Bigger Pockets. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.
3. Calling - and then there's this option. Which is what I had to do. I had to call about 200 lenders (no exaggeration) to learn of 4 lenders who did this and I have some tips. First, when calling banks target the smallest most community based banks you can first. If you have never heard of them, and they have one location - that's a good candidate. No big, national, publicly traded banks will do this loan type. Second, try to ask for "LINES OF CREDIT" instead of "HELOC". I know it sounds like I'm splitting hairs but some banks write HELOCs in their residential department....which won't write Investment Properties. And that residential department will often not speak to the commercial department.  So they'll just say "sorry, we don't do it"....not even knowing that they really do!  So if you ask for a "line of credit on an investment property" that should get you to the COMMERCIAL division.  That's the section of the bank we want.  Now, most of these smaller banks may only have 12 employees or so.  So don't get frustrated if they don't return your call or aren't in the office.  Just call back and be friendly.  Maybe play dumb a little "I don't know if I'm in the right place..."  "I'm sorry to disturb you, you may not be the right person for this....", etc.  Maybe someone can get you to the right person.  Again, be prepared to call A LOT. 

Anyway, I hope this helps in some way.  Good luck!