Second Mortgage / HELOC in Palm Springs, CA

[Dan Aharon]

Hi folks!

I recently bought a property in Palm Springs that is meant for Short-Term Rental. The house is currently valued at ~$1.5M but we plan to spend ~$500k on renovation and expect it's value to go up to $2-2.5M after it's all done.

There is ~$1.05M loan balance on our 2.25% 30-year fixed-rate mortgage which we don't want to touch (would be hard to get those rates these days) - but we are looking for ways to finance the $500k renovation without too much out of pocket cash and without refinancing.

I've heard about second mortgages / HELOC that could offer variable or fixed rate loans. Most banks look at the "as is" appraisal for LTV calcs but I've found at least one broker (Renofi) that works with appraisals based on architect drawings to produce LTVs. The downside is that the rate is a bit higher - 5-5.5% adjustable interest rate. If we go with Renofi, we'd probably want to refinance after the renovation is done into a "standard HELOC" with a standard bank based on a standard appraisal and maybe get a lower (and fixed) rate.

A few questions for you all -

1) Has anyone worked with Renofi and have any experiences (good/bad) to share?

2) What are typical rates for HELOCs these days (ideally fixed and/or interest only)? Are you getting substantially lower than 5%?

3) Any recommendations on the best way to move forward in my case?
 

Thanks,

Dan