Some Help/Questions on Getting Started

[Anthony Schiano]

Hello everyone,

My name is Jonathan, and I wanted to get involved with real estate investing.

I'm thinking about starting a short-term rental business, rental arbitrage, a laundromat, or partnering with someone in real estate.

Before I start out, I do have a couple of questions.

Current scenario:

I do own a house with a total of 4 rooms. I'm going to rent out 2 or 3 rooms, which could possibly cover my mortgage.

Bought Home: 300k

Current Owe: 200k

Current Value: 470k

Equity: 470k - 200k = 270k

80% LTV: 470k / 80% = 376k

Available Cash: 376k - 200k = 176k

I did talk to a lender at my local bank, and they are willing to give me 80% LTV.

Obviously, the great news is that I have 176k to use in my favor to invest.

The bad news is now my mortgage went up from ~1200k to ~1700k, and it resets my mortgage back to 30 years.

The good news: appreciation, tax benefits, tenants paying down your mortgage, and cash flow.

Like I said before, to cover most of my new mortgage, I'm going to rent out 2 or 3 rooms.

Does anyone have an idea what to charge for each room?

It is a nice big house, built in 2019, in a nice area (Myrtle Beach, SC), with nice attractions.

Should I get an LLC if I want to purchase another property with the extra money from refinancing?

How do banks look at my DTR (debt-to-ratio)? I mean, if I constantly buy a house, wait for the house value to increase, go to the bank and refinance, dump it into another property, and repeat, wouldn't I be in so much debt that banks would shy away from lending to me? Or would having a positive cash flow change all of that?

I'm assuming that once I receive the equity from refinancing, I have to re-apply for another loan and get a pre-approval from a bank in order to purchase the additional property. Is that correct?

If I get a pre-approval loan from my bank, is it possible to buy multiple rental properties?

Thank you and sorry for all these questions.

[Chris Seveney]

@Anthony Schiano

Owning real estate vs starting a business two different things.

For loans lenders will look at your DTI and typically will not include your house Jack income for first two years.

You can get dscr loans which do not take into account your income but from a financial situation you should always make sure not to over leverage yourself and what happens if you cannot rent your rooms and your rental is vacant can you swing 6-12 months payments for both?