HELOC vs Business Line of Credit for Student Housing Investors: Which Financing Option is Right for You?

Investing in student housing presents unique financial challenges—and opportunities. Whether you’re expanding your portfolio, renovating older properties, or managing seasonal cash flow, having flexible financing is critical. Two popular funding options are the Home Equity Line of Credit (HELOC) and the Business Line of Credit (BLOC).

This guide breaks down the pros and cons of both options specifically for student housing investors, helping you make the best strategic decision based on your financial situation and growth goals.

What is a HELOC?

A Home Equity Line of Credit (HELOC) allows you to borrow against the equity in your personal or investment property. It operates like a credit card, with a revolving credit limit and variable interest rates.

Key Features:

• Collateral: Secured by real estate (often your primary residence or investment property)
  
• Interest Rates: Typically lower due to secured nature
  
• Draw Period: Usually 5–10 years followed by a repayment period
  
• Tax Benefits: Interest may be tax-deductible if used for property improvements (check with your tax advisor)
  

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• 100% online application—no in-person appraisal needed​
• Pre-qualify in minutes; funding in as few as 5 days​
• Borrow up to $400,000 with flexible terms​
• Soft credit check—no impact on your score​

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What is a Business Line of Credit?

A Business Line of Credit offers flexible, short-term funding to cover expenses, manage cash flow, or invest in opportunities.

Key Features:

• Collateral: Often unsecured (though higher amounts may require it)
  
• Interest Rates: Generally higher than HELOCs
  
• Credit Limit: Based on business revenue, credit history, and time in business
  
• Uses: Can be used for any business-related expense, including property maintenance, staffing, and marketing
  

HELOC vs Business Line of Credit: A Side-by-Side Comparison

Which Option is Better for Student Housing Investors?

Use a HELOC If:

• You have substantial equity in a property.
  
• You’re planning large renovations or capital improvements.
  
• You want to lower interest costs on longer-term debt.
  

Use a Business Line of Credit If:

• You need quick access to working capital.
  
• Your business is established with steady income.
  
• You want to separate business and personal assets.
  

Pro Tip: Many seasoned investors use both—leveraging HELOCs for major upgrades and BLOCs for recurring operating expenses or off-season vacancies.

Real-World Example

Let’s say you own a duplex near a college campus with $100,000 in equity. You want to renovate the kitchen and bathrooms to raise the rent before the fall semester.

• With a HELOC: You could borrow at 6–7% interest, draw funds only when needed, and enjoy a decade-long draw period.
  
• With a BLOC: You might access $50,000 quickly, but at a higher interest rate (10–12%) and shorter repayment period.
  

In this case, a HELOC may be more cost-effective, especially if the upgrades are significant and not urgent.

FAQs

Can I use a HELOC for multiple student housing properties?

Yes, if the property securing the HELOC has enough equity. However, most HELOCs are tied to a single asset.

Is interest on a business line of credit tax-deductible?

In most cases, yes—if the funds are used for legitimate business purposes. Consult a CPA to ensure compliance.

Will using a BLOC affect my personal credit?

If it’s tied solely to your business EIN and not personally guaranteed, it may not affect your personal credit.

Read Next

• How to Analyze a Market Before Buying Your First Investment Property
• DSCR Loans for Multifamily Properties: Financing 5+ Unit Investments
  

By understanding the nuances of both HELOCs and business lines of credit, student housing investors can make smart, informed financing choices that align with their unique property goals and cash flow needs.

Unlock Your Home Equity with Figure

• 100% online application—no in-person appraisal needed​
• Pre-qualify in minutes; funding in as few as 5 days​
• Borrow up to $400,000 with flexible terms​
• Soft credit check—no impact on your score​

Get Your Rate