I have residential investment property in Texas that I own free and clear and would like to tap into the equity via HELOC. Property is an income producing asset. Does anyone know if the option for taking a HELOC on investment property exist anymore, if so, who are some of the reputable lenders in Texas? Thanks
None of the lenders that I looked into will not give helocs on investment props. I would look into doing a cash out refi. Oh, I’m in Mass.
You cannot do a cash-out refi on a property that you own free-and-clear because there is no mortgage to refi.
Ok, then can you get a traditional mortgage with the check made out to you (the owner)? Same thing but different ehhhh?
So basically you would sell it to yourself. I highly doubt that any lender would allow this, as there would clearly be a conflict of interest as the buyer and the seller are the SAME PERSON! Interesting idea though…
Ok jake, now you have me thinking. If I own an investment prop outright, you’re saying the only way I can cash out of the equity in the house is to sell it? That makes no sense. Anyone else want to chime in on this one?
I definitely hear what youre saying, and my initial response would be to take out a HELOC on your investment prop, but you said that you couldn’t find a lender that would do this anymore so that eliminates that idea, at least in your area…
I haven’t ever owned a prop free and clear so my suggestions are limited, but I do stand by my cash out refi comment from before, as I’ve seen this question come up several times with the same outcome. Hopefully someone else can throw their hat in the ring on this one…
We’ve got a free and clear rental property we’re getting ready to roll into a deal with another property we’re purchasing. Our banker is going to do a blanket loan for them so we can get our money back out of the current property. Gotta love local banks!!
This is one interesting angle (getting cash out of investment prop owned outright)that I have never thought, or read about. Not that I have to worry about that for quite a while, as my props are all mortagaged for quite some time- or at least until the housing market heats up again!
FYI- I contacted Bank of America and they were willing to provide either a HELOC or Cash Out Refi on investment property up to 80%. They stated that it would take 75-90 days to close deal. Proposed closing costs were pretty costly, quoted between $4-7k. Found a local bank that would structure similar loan. Closing cost between $800-1200 and deal would close in 2 wks. I’m definitely a fan of local banks now!! Thank you all for your input!!
I have seven HELOCs (3.5% to 6% presently) on investment properties I own (well, owned) free and clear, the last one I got was a year ago. Most are with my local credit union. If you have one nearby, go visit them. I prefer HELOCs to cash out refis because it’s a revolving loan fund, take it out, pay it back, do it again. Since it’s reported like a revolving credit card would be, I’d recommend trying to keep it under 50% in play, or your credit scores will drop. Also I recommend setting up auto payments of interest or whatever their min. payment is so you don’t forget and miss a payment.