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?

[Joe M.]

Ive talked to one bank.  They offer equity loans on rentals, but not heloc.  

[TJ Joseph]

I've been wondering about this also. I'm not sure why banks are reluctant since they are in first position on the HELOC? I'll keep digging and check into smaller banks and credit unions.

[Keith Perkins]

I am following because I am curious as well. How about if you open the HELOC while it is a primary residence and then turn it into a rental. Can the bank close the line and or are they likely too?

[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!

[Keith Perkins]

@Andrew Postell thank you for the solid advice.

[Jeremy Roberts]

@Keith Perkins I have a first position HELOC with one of the big banks for my primary residence. I asked if problems would arise if I moved and rented the house and was told no. In reality, all they can do is discontinue the draw period, which is 10 years, but that isn't in their best interest.

[TJ Joseph]

@Andrew Postell Thank you for the great advice!  I'll definitely look into these options.  

[Jackson Tate]

@Andrew Postell Thanks for the feedback! That's crazy that you called 200 lenders. I've called about 10, so nothing close to what you've done, but I've gotten the same response every time. Looks like I need to keep calling!

[Ricardo Gonzalez]

Thanks for the great info @Andrew Postell!

We are looking into getting a line of credit on a rental property in North Richland Hills in the DFW (I’m sure your familiar with NRH). Can you shed some light on any banks in the DFW that are willing to do that?

[Ron Gallagher]

A little searching on the BP forums here would reveal that I have posted about the lenders I have found that will put a HELOC on a rental property and they are:

1.) PenFed FCU
2.) State Department FCU
3.) TD Bank
4.) and if you really hate yourself and want to deal with a corrupt bank- Wells Fargo

Please add to this list if one of the 100 banks you call tells you they offer HELOCs on investment properties. 

[Brian Simpson]

Andrew Postell nailed the answer. I currently have a line of credit with properties in South Texas thru a small local bank after trying with many others large and small that I had longstanding relationships with

[Kerry Baird]

US Bank, and TRUSTCO do HELOCS

Ridge Lending offers an All in One HELOC, with an associated checkbook feature, 70% LTV on investment property.

[Gary Jenson]

BECU in WA state will do it.

[Marc Izquierdo]

I've inquired about the same thing. I have my business accounts set up at a small local credit union and they will do a HELOC up to 80% (total debt) LTV.

[Mike S.]

@Keith Perkins I've done this. And I still have that heloc. Nothing was ever said about it. Yet.