[Incbiz440]

I know not much of this out there but will ask anyway.

Anyone doing second position business or investment use LOCs when they are not the ones holding the first on the property?

In corp name, not personal.

[Incbiz440]

What type of property?
I can do a second on personal residence in 33 states.
Also NOO investment property
Who is on title and how is that different than who holds the note?
Not sure I understand the situation.

Reach out.

What I mean is a lender that will come in behind a different lender with a LOC secured by the property. In most instances that I see you'll have lenders that will consider a second position line using the property as collateral, but they will only do it if they hold the first mortgage as well.

More of a general question than deal specific, but have had some inquiries recently related to residential investment property - usually to leverage to make offers in cash or do reno. Was looking for something like Figure, but their restrictions on property titling doesn't align with most clients I see. But overall looking for any option that may do a 2nd position line on any type of business/commercial/investment property.

Could be my ignorance in residential owner occupied lending (never has been my space) but those 33 states, what, allow business titled loans against residential owner occupied properties? Or what's the legal structure there that makes that work.... assuming you're not also working in the residential space.

[Incbiz440]

I can do second mortgages in 33 states. Call me and I'm not sure I understand your question - are you talking about a different entity than the first on title? Second lien is irrelevant to the first lien holder. However, some notes for blanket first liens prohibit second mortgages.

I must not be explaining this well.

Real Estate Investment Company LLC has a first mortgage on their property with Bank A.

Real Estate Investment Company LLC would like to use the equity in the property to do renovations, have access to quick cash to pick up another property, whatever.

Real Estate Investment Company LLC asked Bank A if they would do a line of credit, in second position behind the first mortgage, secured by the equity in the property. Bank A does not offer lines of credit in that scenario.

Real Estate Investment Company LLC would like to keep their first mortgage with Bank A because the terms are excellent.

Real Estate Investment Company LLC is now looking for another bank or lender - we'll call this lender Bank B - for a line of credit, in second position behind Bank A's first mortgage, secured by the equity in the property.

In most instances Bank B will do a line if the property has no other mortgages or encumbrances, or Bank B will do a line in second position behind a first mortgage if the first mortgage is also held by Bank B.

Bank B will not do a line of credit secured by equity in the property if Bank A has a first mortgage already.

Real Estate Investment Company LLC is looking for a bank or lender that will do a line of credit, secured by equity in the property, behind Bank A's first mortgage.

That is the question - who, if anyone, will do a second position line of credit secured by the property when Bank A has a first mortgage already. Properties are held in an LLC, not a personal name or trust, which eliminates Figure as an option.

[b2bfunding]

No problem. Just need a 680 fico, and own less than 10 properties and a 1.0+ DSCR.

[abfunders]

YES! There's one lender who provides a LOC using the RE income as the collateral. It's something akin to an MCA but for the NOI of the properties. Minimum MRR is $9,000, rates in the upper teens, 1-5 year term, nothing goes on title. Pays 1% on the front end plus whatever origination you put on it.

[Incbiz440]

YES! There's one lender who provides a LOC using the RE income as the collateral. It's something akin to an MCA but for the NOI of the properties. Minimum MRR is $9,000, rates in the upper teens, 1-5 year term, nothing goes on title. Pays 1% on the front end plus whatever origination you put on it.

I ended up sending over that option - although it's not a LOC, if I remember right - and client didn't seem to be too enthusiastic. Also had a hard time getting a response from them as apparently they didn't have anyone working as a broker rep when I reached out.

[thorn89]

SpringEQ does HELOCs/HEloans on investment properties. Second position is a-ok per their guidelines

[abfunders]

I ended up sending over that option - although it's not a LOC, if I remember right - and client didn't seem to be too enthusiastic. Also had a hard time getting a response from them as apparently they didn't have anyone working as a broker rep when I reached out.

Yes, Incbiz, it's a partial LOC. Draw when you want, but then each draw is its own 1-5 year term with a minimum of 12 months of interest. The blended rate is way better than doing a fresh refi with higher interest rates.

[Ehenek]

This is crazy! He did not identify the asset class, the entire structure of the cap stack, $ amount, additional collateral, but the sponsor feels they can keep a 1st and request a revolver on remaining equity & this should also be NON-RECOURSE/CORPORATE LIABLE!

[Incbiz440]

This is crazy! He did not identify the asset class, the entire structure of the cap stack, $ amount, additional collateral, but the sponsor feels they can keep a 1st and request a revolver on remaining equity & this should also be NON-RECOURSE/CORPORATE LIABLE!

This was a few months ago - to clarify, they weren't looking for non-recourse (but I see I didn't word that clearly); I had spoken with a couple of options who would do second position HELOCs but required that the properties be held in an individuals name and all the properties in this case were held in LLCs and there was no interest in transitioning ownership.

Did end up finding a close solution for second position but terms were a little outside of what the client was looking for.

And you are correct, I did not go into major details.