Obtaining a HELOC for an investment Property?

[Brandon Terrazas]

Hello Everyone,

I am trying to see if it is possible to get a HELOC for an investment property. So far, all the lenders that I have talked to have told me that they don't offer that service. Is anyone aware of a lender that does offer HELOCs for investment properties. If so, would you pass that information on to me?

Thank you all for your time.

Sincerely,

Brandon Terrazas

[Dylan Salant]

I'm looking to take out a HELOC on a rental property in Florida. Anyone know of a calculation as to what percentage of net rent I should allocate towards monthly payments without overburdening?

[Kerry Baird]

@Dylan Salant, I suppose that depends upon the terms you have on your mortgage/s and the income you receive. If you only have $200 a month cash flow, then there isn't very much room. If you have $1000 cash flow, you can allocate more to paying off the HELOC.

HELOCs are often (not always...speak to a number of lenders) interest-only in the first 10 years, depending on what terms you are able to find. In this situation of interest-only payments, the payments are lower now than they will be in the future. However, rents largely move upward. You could grow into those larger payments, making small payments now and larger payments later. Or you could smack that debt down quickly and reuse the HELOC.

Remember that HELOCs are more like a credit card for your DTI purposes, and will affect your credit score as utilization goes up.