Having enough equity in your investment property will allow you to access a home equity line of credit to consolidate debt or even buy a new property. A home equity line of credit may be the cheapest source of funding. It is possible to get a HELOC; however, this comes with strict qualifications that may lead you to choose other alternatives.

HELOC Eligibility Requirements

At HELOC, your property acts as security. You can use it to borrow money for your investment property and get cash when you need it. HELOCs are available for investment properties and primary residences. HELOCs for investment properties are more complex than HELOCs for investments. This is because the value at risk of the investment property is higher than the primary property, so lenders choose to lend the primary property. Lenders charge higher interest rates on investment properties due to their high value at risk.

Primary HELOC homes have a credit score of 620 or higher, while investment properties have a credit score of 720 or higher, making it an easier option for homeowners

Find a Lender

HELOC investment property lenders are hard to find in the market. Now that you are eligible for a HELOC investment property, you must take the time to find one.

Where can I find a HELOC rental company?

Real estate forums; online forums on social media platforms and websites have the best ideas on where to find investment property lenders.

Banks; some banks offer HELOC offers. Check your local bank or credit union and online sites for eligibility in your area.

Estate Agents; Mortgage Brokers are ideal if you are looking for a HELOC investment. They have a wide range of lenders dealing with real estate investments. Don't settle for just one option; weigh at least three to five lenders and compare the fees and interest rates that come with the loan.

 You can choose to apply to multiple lenders as long as it doesn't affect your credit score. Working with multiple lenders allows you to compare rates before deciding on the most reliable lender.

Negotiation

If you don't have a clear winner, contact the best lender of your choice and ask for a better deal. Telling you about other competitive lenders is a great way to close the deal.

Other Alternatives to HELOC Investment Properties

If you are not investing in that investment property, there are friendlier options available if your equity in the land and property is worth it.

Primary residence; HELOC primary residences have better interest rates than investment properties due to their low VaR. Residential properties may not require a cash reserve compared to investment properties, which require six months of rental property insurance as proof for long-term renters.

Payment refinancing is limited to 80% to 90% of your equity. They have lower rates compared to HELOCS. The way they work is to replace your existing mortgage with a new one that is higher than the amount you currently owe your lender. However, if you are unable to pay, there is a risk of foreclosure.

Unsecured personal loans; personal loans have no collateral and are entirely dependent on your credit rating and financial situation. Most of them don't offer down payments with same-day loan deals. However, interest rates are higher than HELOCs.

Home Loan Equity; the value of your real estate is the home equity qualifier. If you have enough equity, you can apply for a loan. They offer some cash with fixed rates and installments.

Note: HELOC rates may be higher if the value of the property declines over time. You end up paying more than you owe.