I asked my audience what financing question they most want answered, and three different people

asked me the same thing.

Can I get a he lock on my rental property?

So I asked my go-to mortgage broker Brian Maddox to join me and give me the answer.

And today we're walking through that and a bunch of other investor financing questions.

Let's get started. If we haven't met yet, my name is Chad Carson.

You can also call me Coach Carson.

And on this channel, I teach you how to use a small and mighty style of real estate investing

to achieve financial freedom so you can spend your time doing more of what matters.

This is going to be a fun episode because we have a question that I'm just going to jump right to this question and then we'll go into more depth. But this is both from Nico Garcia, who is our RPM member, and also we had Lee Edwards, who was an Instagram member who asked, can you get a HELOC on a rental property? I'm going to start there and then we'll go into more depth on the question. Love it. So Helocks are, if you go to a bank, they're going to say,

no, it doesn't exist. I have 17 different lenders that provide helocks on rental properties. Some of them require us to be in first lien position, some require or allow us to be in second position. I even have a third position helock that you can get. So there's not a best helock. There's just best for your situation. And some of the things we're going to look at is your draw period.

So how long can you interact? that you can get. So there's not a best helic. There's just best for your situation. And some of the

things we're going to look at is your draw period. So how long can you interact and go in and out of that helot? We've got three year, five year, 10 year, and 30 year draw period options. So there's something for everyone and we can find a helic that's appropriate for your situation. So can we take a step back, you know, some people a helic means. Some people might have never heard of that. So can you define helic? And then can you explain to me, what's the difference between a traditional helic you get on your home? And is there a difference between that and an investment type helic? I love that question because there's a huge difference. A heloc is a home equity line of credit. So think of it like a credit card attached to the house.

So it's secured by the equity in your home and you can go in and out of that he lock or you can borrow money and then pay it back.

And once you've paid it back, you can borrow again. So that's the open-ended part of a he lock. It differs from a second mortgage, a fixed mortgage, where you get a bucket of money at closing, and then you just make payments, just like a car loan. So you can do a home equity loan or a home equity line of credit. And this is really useful. I know one of the most common things I get, and I know you get this with your lending clients, is people have is people have a first mortgage that's a pretty good rate. Maybe they got like a 5% investor rate five years ago or whatever the number was or even a 3% that they used to live in. You don't want to touch that 3%. So you don't want to refinance the entire property out and do a cash out refinance. We talked about that on another episode. So a home equity line of credit or pulling out a second mortgage is an option to keep that first mortgage in place. Right. So that's a big deal. But then what you've also just given is there's a distinction between a line of credit where you can draw in and out, in and out. You pay it off. You put it back. Versus just borrowing it one time a second mortgage and then you just take the bucket of money and then

you're done there is no like paying it off like a credit card did i explain that right exactly right yeah

that home equity loan it's like the car loan it's a term loan or like your first mortgage it's

usually a 30 year fixed rate and it's got a monthly payment there's no escrows in it that would be in

your first mortgage typically. And the

loan to value on both the HELOC and the loan will help determine what the interest rate is.

So the higher that you tap that equity, you're going to pay a slightly higher interest rate

to have access to that extra equity. You also asked a question, I forgot to answer it.

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