Tapping equity in a rental property?

[Marvel2017]

What's the best way to get a low interest rate loan using the equity in a tenant-occupied investment property (my primary residence is elsewhere). Thanks

[arebelspy]

This is quite difficult to do.  Fannie/freddie won't underwrite cash out refis on rentals, so the big banks won't do it.  So then, without government money, you're stuck with a lot worse terms (shorter payback period, higher rates, balloon payments, etc.).

Your best best would be a local credit union, who might underwrite it and keep the loan and service it in-house.

[Another Reader]

Some people have been successful getting HELOCs on rentals, but I have not found anyone in my market that will do that.  It certainly would not hurt to shop around.

[Papa bear]

I know multiple people who cash out refi for their rentals, so it's definitely doable. Call around to some banks and see who can do it for you.  I don't know who they specifically use and I haven't tried myself. 


Sent from my iPhone using Tapatalk

[arebelspy]

Some people have been successful getting HELOCs on rentals, but I have not found anyone in my market that will do that.  It certainly would not hurt to shop around.

Oh, this reminded me of something an investor friend of mine told me last summer (so take it with a grain of salt):

[I spoke with] Penfed, and they do have HELOCs available on investment properties, but only as second lienhold (so worst case I need to find a hard money lender who'll put a $10k first lien on the property :-) and the interest rate is close to 5%.

[Marvel2017]

A mortgage broker many people recommended on a local site said they should be able to get the loan through as a "conforming" duplex setup (since there are two units on the property-one rental and one owner occupied) and the property is zoned to allow a duplex. Said it would be about an 1/8th point premium. Sounds like it will be a "cash out" refi. I'm applying for an amount that is 40% of the equity. Should I apply for 80% and invest that money in other rentals??

[arebelspy]

Should I apply for 80% and invest that money in other rentals??

That depends on the numbers, primarily.  Also... do you WANT more rentals?  If the answer is yes, and the numbers work, then yes, you should.  If the answer is no, or the numbers don't work, then no, you shouldn't.

[clarkfan1979]

Thanks for the info. I have been wondering about this for myself.

[Novicestache]

You could try TD Bank...they seem willing to lend on properties up to 4 units...