Author Topic: NOO HELOCs  (Read 2879 times)

bpleshek

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NOO HELOCs
« on: September 09, 2016, 12:37:38 PM »
I'm looking to get some cash out of my rentals so that I can use them to make further investments.  Here is what I currently have:

Primary Home:  Paid cash.  FMV: ~240k.  Equity: 240k.
Rental #1: 35K first mortgage.  FMV: ~ 120k.  Equity: 85k.
Rental #2: Paid cash.  FMV: ~130k.

I have about 30k in cash right now and am saving about 2-2.5k/month.
I prefer to buy with cash as I have found I can get much better deals that way and properties close quickly, so when I find one I like, I can jump on it quickly.

Plan is to purchase another property(with cash) as a foreclosure/short sale/auction by next ~July.
I can accelerate this process if I can get some cash out of my rental #2.  I'd like it to be a HELOC rather than a refi because that way my costs are minimum and I can keep doing it in later years as the account will remain open as the balance is paid down.

I know that I can get a better rate by HELOC on my primary, but for my personal preference of risk, I want my personal residence to remain free and clear.

Does anyone have any good/bad experience getting Lines of Credit on non-owner occupied properties?

I went to about a half dozen banks around where I live and they won't touch a HELOC on a rental or second home(which many consider the same thing).  They of course will sell me a refi, but I don't want to pay $3k for the privilege of getting my own equity out just so I can pay them interest.

Thanks,

Brian

Marvel2017

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Re: NOO HELOCs
« Reply #1 on: September 12, 2016, 08:39:21 AM »
I'm interested in this as well!

bpleshek

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Re: NOO HELOCs
« Reply #2 on: September 12, 2016, 01:29:50 PM »
I've called about 15 places already.   I found an article on BiggerPockets about this, but unfortunately, it was from 2005.  I called most of those on the list and didn't get much good news.  The one I just got off the phone with was quite weird.  They told me that they do do NOO HELOCs.  But only on a property with a first mortgage.  I said, I own my property outright.  Surely, you having a first position and not a second position is better for you.  He told me that was their policy.  WHAT ???  So I have to be WORSE OFF to get a HELOC from them?

smh.

Anyone know of any financing options I can go with?

Thanks,

Brian

NoNonsenseLandlord

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Re: NOO HELOCs
« Reply #3 on: September 12, 2016, 04:37:28 PM »
Maybe a commercial loan?  Call a commercial banker.

Jack

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Re: NOO HELOCs
« Reply #4 on: September 12, 2016, 04:48:12 PM »
I'd like it to be a HELOC rather than a refi because that way my costs are minimum...

They of course will sell me a refi, but I don't want to pay $3k for the privilege of getting my own equity out just so I can pay them interest.

Does the difference really matter? It seems to me that the bank is going to make a profit somehow regardless of what kind of product they offer you. Sure, a HELOC might not have a down payment, but it'll just compensate by having a higher interest rate than a mortgage would. I am not at all convinced that a HELOC is actually cheaper than a refi in the long run.

Blindsquirrel

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Re: NOO HELOCs
« Reply #5 on: November 13, 2016, 05:47:25 PM »
 if Union Savings/Guardian Savings is in your area, they do NOO HELOCS

NoNonsenseLandlord

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Re: NOO HELOCs
« Reply #6 on: December 28, 2016, 07:43:13 AM »
I'd like it to be a HELOC rather than a refi because that way my costs are minimum...

They of course will sell me a refi, but I don't want to pay $3k for the privilege of getting my own equity out just so I can pay them interest.

Does the difference really matter? It seems to me that the bank is going to make a profit somehow regardless of what kind of product they offer you. Sure, a HELOC might not have a down payment, but it'll just compensate by having a higher interest rate than a mortgage would. I am not at all convinced that a HELOC is actually cheaper than a refi in the long run.

It is a lot cheaper.  And more flexible.  They cost $0, at least mine did.  If you pay a week early, you do not pay interest for that week.  With a mortgage you generally pay the interest due on the balance due at the end of the month, no matter when you pay the payment.

Bobberth

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Re: NOO HELOCs
« Reply #7 on: December 28, 2016, 01:22:15 PM »
I have mine through the commercial side of a local bank.

mooreprop

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Re: NOO HELOCs
« Reply #8 on: December 30, 2016, 11:34:49 AM »
I also recommend you contact the commercial lending department.  You will have a much better chance of getting this type of financing through the commercial lending department of a smaller, local bank.  I, too, got a lot of "no" answers until I started asking other investors in my area which banks they use.  The big banks have very strict rules they follow and really could not help me, but a smaller local bank may have the ability to make their own rules.  Dodd-Franke (spelling?) made it impossible for my small local bank to even continue giving me the types of loans I had come to rely on, but my loan officer referred me to their commercial lending department, and I have been maintaining a line of credit secured by my paid for rental properties that I use to flip houses. They also are giving me portfolio loans for long term hold rentals.  Talk to the commercial lending people, explain your situation, and ask if/how they can help you.   
Ask other investers, call more than one bank, and focus on the smaller ones.  Good luck!

FrugalSaver

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Re: NOO HELOCs
« Reply #9 on: December 31, 2016, 09:36:15 PM »
I also recommend you contact the commercial lending department.  You will have a much better chance of getting this type of financing through the commercial lending department of a smaller, local bank.  I, too, got a lot of "no" answers until I started asking other investors in my area which banks they use.  The big banks have very strict rules they follow and really could not help me, but a smaller local bank may have the ability to make their own rules.  Dodd-Franke (spelling?) made it impossible for my small local bank to even continue giving me the types of loans I had come to rely on, but my loan officer referred me to their commercial lending department, and I have been maintaining a line of credit secured by my paid for rental properties that I use to flip houses. They also are giving me portfolio loans for long term hold rentals.  Talk to the commercial lending people, explain your situation, and ask if/how they can help you.   
Ask other investers, call more than one bank, and focus on the smaller ones.  Good luck!

Are they only offering you a line of credit on your completely paid for rental?  I have several that have a fair amount of equity in them, but are not fully paid off.

Second, what type of rates are they giving you?  Would you mind sharing some of the %'s or costs the commercial portion of the smaller banks are charging you to access your own money (the equity)?