The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: clarkfan1979 on May 23, 2017, 11:10:55 PM
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Based on recommendations from biggerpockets, I called Wells Fargo today asking for a line of credit on two rental properties. They do it and their rate is prime (4%) + 1.63%. You can get a discount if you open a wells fargo account. They let you borrow 60% loan to value on rentals. You must own the property for more than 1 year.
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So they will let you borrow 60% of the loan you have on the house currently or 60% of value of home regardless of mortgage?
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Great tip, clarkfan! That's pretty expensive money, but as long as it's no/low cost otherwise, a nice option to make available.
jmr5x, I would strongly assume that the 60% is for total Loan To Value. So: (1st mortgage + LOC) / Value = .6 max. If you have a $100k property with a $45k mortgage balance, you'd qualify for a $15k loc.
That's a lot lower (and again, more expensive) than for most owner-occupied options, but as I just posted in another thread, I haven't seen any HELOC option at all on rentals for years.
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Geesh, I haven't seen those since 2006-2007. Equity lines on rental properties...
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Geesh, I haven't seen those since 2006-2007. Equity lines on rental properties...
Makes "sense", I guess. Housing prices in the Bay Area are exceeding peak 2006 levels and Wells Fargo's reputation is in the toilet. A match made in heaven?
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In the process of getting a HELOC on an investment duplex. Not going so well. Wells Fargo wants every document in the universe (repeatedly, too) and I've tried to explain 1031 exchange 4 times now, to no avail. Last Friday they asked me to send the checking account statement to show the 1031 payout...
Very disgusted with the company as I asked for the loan over 2 months ago. Just about ready to tell them to forget about it.
Btw I'm only asking now for about $40k on a rental I just bought (loan-free) for $115k. I have awesome credit and very little other debt. I just happen to love HELOCs to avoid all the underwriting fees that normally get charged and the freedom to move money quickly. No one else will do a HELOC on investment duplexes.
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Milspec,
You own this place with no loan? Why not just do a conventional cash-out refinance?
I'd stay far away from Wells Fargo
I only have loans at local banks and credit unions, who promise not to sell them (to giants like these)
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I cash flow about $5k a month so I love HELOCs in the ability to move money quickly and minimize closing costs, interest, and other fees.
If I close this week and don't need the Wells Fargo loan I will probably cancel. I generally use a local bank or two but they won't touch an investment duplex for HELOC.