HELOC for Investment Properties
I am having a hard time finding a bank that will provide a HELOC for an Investment property. I want to build a garage at one of our rental properties and use the equity in the property as leverage to build the garage. Mortgage is $170,000 and market value of home is $350,000. Banks are offering personal loans for the $50,000 for 5 years at 9% as alternative. I do not want to use my home for the equity loan. Any advice on how I can finance this garage and why I am having such a hard time finding a bank that will do a HELOC on investment property. It seems what worked before, is not viable now?
Terry Says
Banks are getting tougher about credit standards, and rental property especially, since it is not a guaranteed income from the property to repay the loan.
You could refinance the entire property to improve it — but that rate would likely be higher than your current mortgage. So you’d have to decide whether the higher rent you could get with a garage addition would offset the higher monthly payment on the property itself.
Don’t use your personal residence to fund this rental property in any way!
