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Is it possible to use a HELOC to buy a second house for lease?

the house is a duplex that I'd want to rent out to two families. Cost is $450K by johnson.mathers.c... from Ann Arbor, Michigan. Jan 10th 2014 Reply


William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,726 contributions

Yes.. one of the benefits of having a HELOC is you apply one time, and you have unlimited use of the funds without having to apply each time.. so long as you have enough room in your HELOC, you can use the funds for what ever you wish.. You might want to talk to your tax advisor regarding how to handle the interest write off, since most HELOC's are written against a primary residence, and current laws only allow you to write off interest up to $100K, you need to have a tax strategy which will enable you to write off all your interest.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 10th 2014
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Christopher Peterson (ChristopherPeterson)
#45 ranked lender in Michigan - 1 contribution

Yes you can and as previous broker stated you can use that money for whatever you want. I am landlord in Ann Arbor, licensed realtor and owner of a Peterson Mortgage LLC. Do you own any other rental properties. Feel free to contact. 734-930-0888

Jan 10th 2014
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Robert Hanson (rhanson)
#38 ranked lender in Maryland - 646 contributions

Not sure if you already have this HELOC, or if you are planning on applying for one....? Also not sure if you are attempting to use a HELOC on a different property, or utilize a HELOC as financing on the property that you are buying...? If the latter is the case, you will probably not have much luck as I am not aware of many options anymore for HELOC's attached to investment properties. If it is an existing HELOC, make sure you are able to handle the terms at the end of the draw period when the payment will increase to pay off the balance over a shorter period of time and also will likely involve a higher interest rate. This is a a lot of detail to go into on a forum such as this, so either drop me a line, or speak with someone else knowledgable about all this that you can trust. Robert L. HansonGladewater National BankFirst Time Homebuyer SpecialistDirect: 240-752-7549Cell: 301-651-7822Email: rhanson@gladewaternational.comNMLS# 695929

Jan 10th 2014
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Mike Silkworth (msilkw_195_870)
#31 ranked lender in Michigan - 527 contributions

It's very likely you can. Sounds like you are doing your homework to structure a deal in the best possible way. You want to make sure you are talking to a lender familiar with Investment properties and understands not only getting you financing, but getting you the "right" financing. I read other responses and it sounds like Christopher Peterson would be a GREAT person to talk to. Especially since he is local to you in A2. Good Luck to you!!!!

Jan 10th 2014
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Dave Metsker (DaveMetsker)
#36 ranked lender in Oregon - 2,317 contributions

A HELOC on your present residence may be used for any purpose. A purchase HELOC on a rental duplex may be difficult to obtain.

Jan 10th 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,246 contributions

Sure, if you mean a HELOC on a property you already own and as long as you have enough equity to obtain a large enough one to pay the cost of the new property. A $450,000 HELOC is pretty large but should be available from some lenders. Generally it is not possible to obtain a HELOC on investment property, or at least it will be difficult to find a lender who will offer that option. PS. Remember that the rate on a HELOC is usually subject to change monthly and in a year or two the rate might be much higher than it is initially.

Jan 10th 2014
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,828 contributions

You can, but I wouldn't. You can use the available credit on an existing HELOC for any legal purchase, including another piece of real estate. Personally, I love being a landlord, there's nothing else like someone else making your mortgage payments for you. However, it can be daunting and not everyone has the patients, skill set or knowledge to do it right. If you think you do, then it's a great way to grow your asset base. Before you use the equity line for this purchase, you should talk to your tax man. In addition to limitations on the deductibility of HELOC interest, there are other risks in using a HELOC for a long term purchase. Because rates on HELOCS are adjustable you could be in for a huge shock if markets turn and rates begin a dramatic rise, and this has happened before. Most HELOCS have no interim adjustment cap and their lifetime caps are usually in the upper teens (16-20%). Because of the way the interest is able to change, HELOCs are usually considered short term financing. Most financial advisors will tell you not to finance long term assets with short term financing. Before you make the $450K purchase, you absolutely should sit down with your CPA/Financial Planner. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Certified by the National Association of Mortgage Professionals and Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jan 10th 2014
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