Tag Archive for: HELOC

5 Things To Do Before You Get a HELOC

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What should you know before you get a HELOC?

First, know where to go for HELOCs. This is typically local credit unions and large national banks.

But before you call these institutions, make sure you have these 5 things ready:

  1. How much your property is worth.
  2. How much you owe on it.
  3. Align your LTVs. So if it’s a rental property, make sure your current mortgage and your current value is 70-75% or less, or HELOCs are probably not going to be available to you.
  4. What your credit score is. Know what it is and know what it needs to be. Most places will require a minimum 680, but 700 is better. The higher your credit score, the higher your loan-to-value.
  5. What type of property it is. Especially with a rental, know its condition and whether it’s a single-family, duplex, etc.

A final tip on HELOCs: each bank or company will give you a HELOC on between one and three of your properties. So if you want a HELOC on five, ten, or twenty properties, you’ll have to set up accounts at different banks.

As an alternative, you could also look into lines of credit, which span multiple properties.

Help to Get a HELOC (and More)

We want to make it easier for you to get the best, cheapest leverage possible for your investments.

If you have any questions or have a loan you’d like us to price out, reach out to us at Info@TheCashFlowCompany.com. If you just want more information on real estate investing, you should check out the videos on our YouTube channel.

Read the full article here.

Watch the video here:

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How to Use a HELOC like Cash to Buy a Property

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If you want to buy properties quickly… here’s how to use a HELOC.

A HELOC allows you to buy properties with cash, without having the actual cash. So how does this work to buy properties with a HELOC?

Once you’ve set up a HELOC, you could go into the bank at any time and ask them to draw the money out or wire it.

Within hours of finding a property, it’s possible to go under contract, set up a closing, fund it, and own it. Once you own the property, you can always refinance later into a more traditional loan to pay back what you took from your HELOC.

This allows you to compete with cash buyers because this is exactly how they do it. Using a HELOC in this way gives you the power to get in front of the line.

How to Use Small HELOCs

HELOCs are a valuable tool in any investors’ toolbelt. It’s one of the easiest ways to ensure no good deal will get away from you.

Even if your HELOC isn’t big enough to fund the purchase of the whole property, you could still use it as a down payment. This way, you might not need to wait for lender approval to close.

Even if it’s not purchasing the whole property, maybe it’s putting the money down. So you don’t have to wait for your lender. You don’t have to figure out if they’re going to approve you or not.

How to Use Big HELOCs

If you want more HELOC power behind your investing punch, there are a few things to keep in mind.

First, if you own multiple properties, you can put HELOCs on each of them. More lines of credit equals more cash available to you.

Second, you want to ensure you’re getting the best HELOCs. What makes HELOCs the best for real estate investors who compete with cash buyers? There’s one thing: high loan-to-values.

You’ll want to shop around to get the maximum amount you can from these lines of credit. Money is power in real estate investing, so choosing the HELOC with an extra point in fees shouldn’t distract you from your highest LTV option.

The best lenders will be able to give you 70-75% LTVs on your rental properties and 80-85% on your owner-occupied home.

Where to Find the Best HELOC

So where do you find the best HELOC? It’s something you’ll have to do a little research on.

If you don’t want to do your own research, we do it every month. We call all the banks and credit unions in our markets to find out who has the best loan to values, lowest rates, and easiest qualifications. Reach out at Info@TheCashFlowCompany.com if you want this list!

Read the full article here.

Watch the video here:

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5 Differences Between a HELOC and a Bank Line of Credit

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HELOC and a bank line of credit… which is better for your investments?

So what’s the difference between a true bank line of credit for your business and a HELOC?

Let’s go over 5 key differences you should know.

1. Qualifying for a HELOC or Bank Line of Credit

Typically with a bank line of credit, which is a line of credit on one or multiple properties, you could have one line of credit that covers all of your properties or just part of them. You have that flexibility. But, in order to qualify, you also have to provide all the paperwork, taxes, and everything a bank usually requires.

For a HELOC, qualifying is usually just as simple as getting an estimate or value on your property, and having a good credit score. There is often minimal paperwork and little concern about your income.

2. Applying

One major benefit of a HELOC is once you get one, they’re good for a set draw period. That period is usually 5 or 10 years. So once you get it, you have it at your disposal for that timeframe. You can use it over and over.

A bank line of credit that goes through your business is less set-it-and-forget-it. Some banks will want to look at your financials every year, and some every two years. You’ll have to re-qualify every couple of years.

With a bank line of credit, you have to bring in your paperwork every few years, so you have to be sure your business stays profitable. They also re-evaluate the property’s value, which can be pro or con depending on the market.

3. LTVs on a HELOC or Bank Line of Credit

What are they going to lend you? A HELOC on a non-owner-occupied property usually maxes out at 70% of your equity. In owner-occupied, that could be up to 80%.

Depending on your credit and your properties, a bank line of credit will probably have a maximum LTV of 75% average overall on the properties.

The LTVs on these two lines of credit aren’t that different. It’s more important that, whichever option you go with, you shop around to maximize your loan-to-value.

4. Costs

Typically, a HELOC costs a few hundred dollars to open up. So each property you put a HELOC on will have its own fees (the couple hundred bucks) and requirements every time. But remember, this lasts for 5-10 years, or until whenever you refinance it.

The cost for a bank line of credit will be somewhere between one and one and a half percent. They may need some appraisals to approve it. And remember – since it’s only a 1-2 year limit on bank lines of credit, these charges will happen at least every 2 years.

5. Source

Now, the biggest benefit of a bank line of credit: it’s in one source.

For HELOCs, you have a small amount available on each property. So if you need a large amount, you’ll have to go to each bank or credit union and pull out the amounts. You’ll have different accounts at different banks that you’ll have to manage the payments on. You may have two HELOCs, or you might have 10 – and you might have to put all 10 together to get enough funds for what you need.

Read the full article here.

Watch the video here:

https://youtu.be/BXvXb0BpyPo

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The Secret Method to Compete with Cash Buyers

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Setting up this simple funding source helps you compete with cash buyers in your market.

Cash buyers always swoop up the best deals. Why? Wholesalers and realtors contact them first because they know they’ll get a fast, simple close with these people.

How can you even begin to compete with cash buyers in the real estate investing market? HELOCs are a secret weapon that not enough investors are tapping into.

A HELOC allows you to play the same game. Let’s go over the details.

How to Use a HELOC like Cash to Compete with Cash Buyers

A HELOC allows you to buy properties with cash, without having the actual cash. So how does this work to buy properties with a HELOC? 

Once you’ve set up a HELOC, you could go into the bank at any time and ask them to draw the money out or wire it.

Within hours of finding a property, it’s possible to go under contract, set up a closing, fund it, and own it. Once you own the property, you can always refinance later into a more traditional loan to pay back what you took from your HELOC.

This allows you to compete with cash buyers because this is exactly how they do it. Using a HELOC in this way gives you the power to get in front of the line.

Small HELOCs

HELOCs are a valuable tool in any investor’s toolbelt. It’s one of the easiest ways to ensure no good deal will get away from you.

Even if your HELOC isn’t big enough to fund the purchase of the whole property, you could still use it as a down payment. This way, you might not need to wait for lender approval to close. 

Even if it’s not purchasing the whole property, maybe it’s putting the money down. So you don’t have to wait for your lender. You don’t have to figure out if they’re going to approve you or not. 

Big HELOCs

If you want more HELOC power behind your investing punch, there are a few things to keep in mind.

First, if you own multiple properties, you can put HELOCs on each of them. More lines of credit equal more cash available to you.

Second, you want to ensure you’re getting the best HELOCs. What makes HELOCs the best for real estate investors who compete with cash buyers? There’s one thing: high loan-to-values.

You’ll want to shop around to get the maximum amount you can from these lines of credit. Money is power in real estate investing, so choosing the HELOC with an extra point in fees shouldn’t distract you from your highest LTV option.

The best lenders will be able to give you 70-75% LTVs on your rental properties and 80-85% on your owner-occupied home.

Where to Find the Best HELOC to Compete with Cash Buyers

So where do you find the best HELOC? It’s something you’ll have to do a little research on.

If you don’t want to do your own research, we do it every month. We call all the banks and credit unions in our markets to find out who has the best loan to values, lowest rates, and easiest qualifications. Reach out at Info@TheCashFlowCompany.com if you want this list!

5 Things To Do Before You Get a HELOC

So if you want to compete with the cash buyers, how do you start with getting a HELOC?

First, know where to go for HELOCs. This is typically local credit unions and large national banks.

But before you call these institutions, make sure you have these 5 things ready:

  • How much your property is worth.
  • How much you owe on it.
  • Align your LTVs. So if it’s a rental property, make sure your current mortgage and your current value is 70-75% or less, or HELOCs are probably not going to be available to you.
  • What your credit score is. Know what it is and know what it needs to be. Most places will require a minimum 680, but 700 is better. The higher your credit score, the higher your loan-to-value.
  • What type of property it is. Especially with a rental, know its condition and whether it’s a single-family, duplex, etc.

A final tip on HELOCs: each bank or company will give you a HELOC on between one and three of your properties. So if you want a HELOC on five, ten, or twenty properties, you’ll have to set up accounts at different banks.

As an alternative, you could also look into lines of credit, which span multiple properties.

Help on HELOCs and More

We want to make it easier for you to get the best, cheapest leverage possible for your investments.

If you have any questions or have a loan you’d like us to price out, reach out to us at Info@TheCashFlowCompany.com. If you just want more information on real estate investing, you should check out the videos on our YouTube channel.

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The Best Lines of Credit for Real Estate Investing

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You use lines of credit for real estate investing. But which are the right ones?

There are two types of lines of credit you can look at as a real estate investor: bank lines of credit vs HELOCs.

A HELOC (home equity line of credit) can go on each unit you own. This goes for your owner-occupied home, or each of your rentals.

A bank line of credit is one line of credit that covers multiple properties. This is how investors get huge lines of credit to purchase properties anytime, anywhere.

The flexibility of either of these lines of credit is unmatched. You can use these funds to:

  • Close on a property at auction, where traditional financing takes too much time.
  • Use it for your rehab costs, instead of putting in escrow draw requests to your lenders.
  • Paying contractors, other payroll, overages, or other business expenses that a primary loan may not cover.

What These Lines of Credit for Real Estate Investing Have In Common

Both lines of credit are a mortgage, or lien, on a property, typically in junior position. This means there’s usually a mortgage on the property already, so the lien for this line of credit comes in second position.

Lines of credit don’t work like a loan for real estate investing – where you take out the money, pay it back, and you’re done. These lines of credit work more like a credit card. You can take the money out, then pay it back, then take some more out, and re-use it over and over.

Also different from a loan, with a line of credit you never have to ask permission to use them. You don’t have to re-qualify each time you do a deal.

Lines of credit give you speed and flexibility in your real estate career.

Read the full article here.

Watch the video here:

https://youtu.be/BXvXb0BpyPo

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Line of Credit vs HELOC: Which Do You Need?

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These funds can supercharge your real estate investments, but which is better: a bank line of credit vs HELOC?

Lines of credit are one of the most powerful tools a real estate investor could keep in their toolbelt – whether a bank line of credit or home equity line of credit.

Let’s go over why these are so powerful, how to put them into practice in your business, and what the difference is between a bank line of credit vs HELOC.

Example of Using a Line of Credit for Real Estate Investing

Here’s a story about the power lines of credit brings to real estate investing:

A client called us recently who purchased 34 units last year. He’s kept them all for rentals.

That’s an incredible volume of properties for one year! I had to ask him, “What’s your secret?”

It’s simple: he has a $600,000 line of credit on his other properties. So when deals come up from wholesalers and realtors, they call him first because they know he can use this line and close within days.

In total, he owns 124 units. His first goal was 100, now it’s 200. And he says the power behind all of it is that of credit.

But he didn’t start out this way. He began just four years ago with zero properties. Let’s look at how you can get started with lines of credit.

Bank Line of Credit vs HELOC – What Are They?

There are two types of lines of credit you can look at as a real estate investor: bank lines of credit vs HELOCs.

A HELOC (home equity line of credit) can go on each unit you own. This goes for your owner-occupied home, or each of your rentals.

A bank line of credit is one line of credit on multiple properties. This is how investors get huge lines of credit to purchase properties anytime, anywhere – like the previous example of our client.

The flexibility of either of these lines of credit is unmatched. You can use these funds to:

  • Close on a property at auction, where traditional financing takes too much time.
  • Use it for your rehab costs, instead of putting in escrow draw requests to your lenders.
  • Paying contractors, other payroll, overages, or other business expenses that a primary loan may not cover.

What a Bank Line of Credit vs HELOC Have In Common

Both lines of credit are a mortgage, or lien, on a property, typically in junior position. This means there’s usually a mortgage on the property already, so the lien for this line of credit comes in second position.

Lines of credit don’t work like a loan, where you take out the money, pay it back, and you’re done. These lines of credit work more like a credit card. You can take the money out, then pay it back, then take some more out, and re-use it over and over.

Also different from a loan, with a line of credit you never have to ask permission to use them. You don’t have to re-qualify each time you do a deal.

Lines of credit give you speed and flexibility in your real estate career.

Differences in Lines of Credit

So what’s the difference between a true bank line of credit for your business and HELOCs?

Let’s go over 5 key differences you should know.

1. Qualifying for a Line of Credit vs HELOC

Typically with a bank line of credit, which is a line of credit on one or multiple properties, you could have one line of credit that covers all of your properties or just part of them. You have that flexibility. But, in order to qualify, you also have to provide all the paperwork, taxes, and everything a bank usually requires.

For a HELOC, qualifying is usually just as simple as getting an estimate or value on your property, and having a good credit score. There is often minimal paperwork and little concern about your income.

2. Applying

One major benefit of a HELOC is once you get one, they’re good for a set draw period. That period is usually 5 or 10 years. So once you get it, you have it at your disposal for that timeframe. You can use it over and over.

A bank line of credit that goes through your business is less set-it-and-forget-it. Some banks will want to look at your financials every year, and some every two years. You’ll have to re-qualify every couple of years.

With a bank line of credit, you have to bring in your paperwork every few years, so you have to be sure your business stays profitable. They also re-evaluate the property’s value, which can be pro or con depending on the market.

3. LTVs on a Bank Line of Credit vs HELOC

What are they going to lend you? A HELOC on a non-owner-occupied property usually maxes out at 70% of your equity. In owner-occupied, that could be up to 80%.

Depending on your credit and your properties, a bank line of credit will probably have a maximum LTV of 75% average overall on the properties.

The LTVs on these two lines of credit aren’t that different. It’s more important that, whichever option you go with, you shop around to maximize your loan-to-value.

4. Costs

Typically, a HELOC costs a few hundred dollars to open up. So each property you put a HELOC on will have its own fees (the couple hundred bucks) and requirements every time. But remember, this lasts for 5-10 years, or until whenever you refinance it.

The cost for a bank line of credit will be somewhere between one and one and a half percent. They may need some appraisals to approve it. And remember – since it’s only a 1-2 year limit on bank lines of credit, these charges will happen at least every 2 years.

5. Source

Now, the biggest benefit of a bank line of credit: it’s in one source. 

For HELOCs, you have a small amount available on each property. So if you need a large amount, you’ll have to go to each bank or credit union and pull out the amounts. You’ll have different accounts at different banks that you’ll have to manage the payments on. You may have two HELOCs, or you might have 10 – and you might have to put all 10 together to get enough funds for what you need.

How the Find the Best Line of Credit

The benefits of a HELOC: they’re fast, easy, and they’ll stay there for 10 years. 

For a bank line of credit, you have all your funds from one source, but every year or two, you have to requalify.

So they both have their benefits, and they both have their uses. Whatever makes sense for you is what you should be focused on.

It’s sometimes hard to figure out what’s best and what banks will work with you. That’s what we could do here at the cash flow company. We keep in touch with banks to find the best credit options for investors.

If you have a question or you need someone to help find the best line of credit for you, reach out at Info@TheCashFlowCompany.com. We’d be glad to help.

For more on real estate investing, you can check out our Youtube videos here.

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Are HELOCS risky?

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Are HELOCS risky?

Today we are going to discuss whether or not HELOCS are risky. Here at The Cash Flow Company we have over 20+ years of experience in the business. This has allowed us to  help many investors to get correctly set up with HELOCs in order to move forward with their real estate investment goals. Remember, leverage is your best friend in real estate. A home equity line of credit can be some of the quickest, most flexible money available.

First and foremost, what Is a HELOC?

A HELOC is like a big line of credit based on the equity you have in a piece of real estate. You can think like a big credit card on a property.

If a property you own is worth more than the amount you owe on it, then you could be eligible for a HELOC. You can use this line of credit for anything you want.

This line of credit is typically in second position. It works similarly to a credit card in the sense that you can use it and pay it off over and over.

Next, where Do You Get a HELOC?

If you’re an investor, the number one place to look for a HELOC is credit unions. Next, is national banks. Those are the two best resources for HELOCs.

Finally, are HELOCs Risky?

Are they dangerous? Is there a big risk in taking out a HELOC? The answer is yes and no.

It’s the same as any other line of credit. If you use it wrong (for personal use, living life, etc.), the debt accumulates with no way to pay it off. This becomes a burden not only for your credit but also for your home.

However, used correctly, HELOCs are a low-risk, high-value tool. Use them for a real estate project, then pay them off right after your project sells or refinances.

Now is the time!

Get a HELOC today and achieve your real estate goals! Want a personalized list of the best HELOCs for you? We’ve reached out to hundreds of credit unions and banks to find the best, highest-LTV HELOCs on the market.

Reach out to us at Info@TheCashFlowCompany.com to get this report.

You can also download this free checklist of questions to ask lenders to get the best deal on a HELOC.

 

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How Does a HELOC Work?

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What is it, where can I put one, and how does a HELOC work?

The amount of HELOCs in the US increased by 30% from 2021 to 2022. Why?

It can be some of the most flexible, least expensive credit for many people – especially real estate investors.

But how does a HELOC work? Let’s go over the basics.

What Is a HELOC?

A HELOC is like a big line of credit based on the equity you have in a piece of real estate. You can think like a big credit card on a property.

If a property you own is worth more than the amount you owe on it, then you could be eligible for a HELOC. You can use this line of credit for anything you want.

This line of credit is typically in second position. It works similarly to a credit card in the sense that you can use it and pay it off over and over.

How Does a HELOC Draw Period Work?

The draw period is the timeframe the credit union or bank allows you to use the line of credit. They typically offer a 5 or 10-year draw period. Within that period of time, you can borrow money and pay it back over and over.

Once the draw period ends, you can’t use the HELOC anymore – you just have to pay it off. It stops being a line of credit and now acts like a fixed mortgage you have to either:

  • Pay off over time.
  • Refinance into a new HELOC with a new draw period.

Can I Only Have a HELOC on the House I Live In?

You can do a HELOC on both your owner-occupied residence and your rental properties.

A few things to keep in mind:

  • A HELOC doesn’t work on a flip – but it does on a completed rental property.
  • The loan-to-value on a rental HELOC will be less than one on your own home.
  • Some investors have 5-10 HELOCs on different properties. It’s a common strategy.

Read the full article here.

Watch the video here:

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8 HELOC FAQs: How To Use a HELOC as an Investor

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The HELOC FAQs we hear most often from real estate investors.

Over our 20+ years in the business, we’ve helped many investors get correctly set up with HELOCs.

Leverage is your best friend in real estate, and a home equity line of credit can be some of the quickest, most flexible money available.

Let’s go over the 8 most frequently asked questions we get about HELOCs.

HELOC FAQs #1: What Is a HELOC?

A HELOC is like a big line of credit based on the equity you have in a piece of real estate. You can think like a big credit card on a property.

If a property you own is worth more than the amount you owe on it, then you could be eligible for a HELOC. You can use this line of credit for anything you want.

This line of credit is typically in second position. It works similarly to a credit card in the sense that you can use it and pay it off over and over.

HELOC FAQs #2: What’s the Draw Period on a HELOC?

The draw period is the timeframe the credit union or bank allows you to use the line of credit. They typically offer a 5 or 10-year draw period. Within that period of time, you can borrow money and pay it back over and over.

Once the draw period ends, you can’t use the HELOC anymore – you just have to pay it off. It stops being a line of credit and now acts like a fixed mortgage you have to either:

  • Pay off over time.
  • Refinance into a new HELOC with a new draw period.

HELOC FAQs #3: Can I Only Have a HELOC on the House I Live In?

You can do a HELOC on your owner-occupied residence, but you can also do one on your rental properties.

A few things to keep in mind:

  • A HELOC doesn’t work on a flip – but it does on a completed rental property.
  • The loan-to-value on a rental HELOC will be less than one on your own home.
  • Some investors have 5-10 HELOCs on different properties. It’s a common strategy.

HELOC FAQs #4: Where Do You Get a HELOC?

If you’re an investor, the number one place to look for a HELOC is credit unions. Next, is national banks. Those are the two best resources for HELOCs.

HELOC FAQs #5: What Should I Look For When Shopping for a HELOC?

The main thing you should look for in a HELOC is loan-to-value (LTV).

As an investor, you don’t need to worry much about rate – what you borrow will be paid off with your projects. Plus, a HELOC interest rate will be lower than most other forms of leverage available to you.

You also don’t need to be too concerned with the draw period. You can refinance your HELOC at any time.

Your main concern should always be maximizing the amount you can get. When shopping around, ask about LTVs.

HELOC FAQs #6: Are HELOCs Risky?

Are they dangerous? Is there a big risk in taking out a HELOC? The answer is yes and no.

It’s the same as any other line of credit. If you use it wrong (for personal use, living life, etc.), the debt accumulates with no way to pay it off. This becomes a burden not only for your credit but also for your home.

However, used correctly, HELOCs are a low-risk, high-value tool. Use them for a real estate project, then pay them off right after your project sells or refinances.

HELOC FAQ #7: Can I Do a HELOC on a Free and Clear Property?

Yes, you can take out a HELOC on a property you own free and clear.

A HELOC comes in first or second position (sometimes third, from some banks). So if you own your home, or a rental property, with nothing owed, then the HELOC will come in first position.

HELOC FAQ #8: What Can I Use a HELOC for in Investing?

You could use a HELOC for almost anything in real estate investing:

  • Down payment
  • Closing costs
  • Carry costs
  • Rehab/construction expenses
  • An entire property, if the line of credit is large enough.

A HELOC is some of the easiest, fastest, most flexible money you can get. Your greatest limitation is the LTV of the HELOC.

Get a Line of Credit for Real Estate Investors

Want a personalized list of the best HELOCs for you?

We’ve reached out to hundreds of credit unions and banks to find the best, highest-LTV HELOCs on the market.

Reach out to us at Info@TheCashFlowCompany.com to get this report.

You can also download this free checklist of questions to ask lenders to get the best deal on a HELOC.

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What You Need To Know About a HELOC Draw Period

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What HELOC draw period should you choose?

An important consideration when you’re shopping for a HELOC is the draw period.

This period is how long you can use the line of credit before needing to pay it off. During this draw period, you can take money out, pay it back, then take it out again, over and over.

HELOC Draw Period Options

Most HELOCs come in two different draw periods: either a 5-year or a 10-year. The longer the draw period, the more flexibility you have.

However, we still recommend setting yourself up with the longest draw period available to you. When you need to refinance, but you’re stuck in a down market, you’ll probably get worse terms on your new HELOC. A longer draw period gives you more control over a better refinance.

Refinancing a HELOC

You’re able to refinance a HELOC at any time. In fact, we recommend searching for better HELOCs every 1-3 years. If you refinance before your draw period ends, then that period doesn’t matter as much.

So, when you start the process of getting a HELOC to buy an investment property, set it up to be long-term. Even if you choose to refinance, you should still look to start with the highest LTV and longest draw period possible.

More Info on Using a HELOC as a Real Estate Investor

Want more information on how to talk to banks when looking for a HELOC to buy an investment property? Download this free checklist.

If you have any other questions, you’re always welcome to reach out at Info@TheCashFlowCompany.com, or check out our YouTube channel for more tips on real estate investing.

Read the full article here.

Watch the video here:

https://youtu.be/25VFJx66yZ8

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