I need advice on getting started with the right financing.

[Tony Henderson]

I'm new to investing. I've been educating myself for a year and I am ready to do my first deal but raising capital seems to still be the obstacle. I would like to by a single-family residence to begin with and rent it out. Once I build some momentum, I would like to BRRRR future deals. would a HELOC be an option?

[John O'Leary]

Hey Tony,

Congratulations on taking the first step towards real estate investing! Raising capital can be a daunting task, but there are several financing options available that can help you get started.

When it comes to financing a rental property, Hard Money and DSCR financing can be great routes to consider as they are easily accessible. Hard money loans are typically short-term loans with higher interest rates and fees, but they can be easier to obtain than traditional bank loans and allow you to do rehab for value add. Once the rehab is done DSCR financing will allow you to BRRRR without having to wait 12 months to refinance or capping you on the amount of open mortgages. DSCR financing is a type of commercial real estate loan that focuses on the property's income potential rather than the borrower's credit history or income(DTI)

Using hard money, or DSCR financing can allow you to acquire a property quickly, do value add, cash out with lower seasoning requirements, and close in your company vs personal name for tax benefits.

In contrast, a HELOC may not be the best option for financing a rental property. While HELOCs can offer low interest rates and flexible repayment terms, they are typically designed for owner-occupied properties and may not be available for investment properties but I'll let a traditional mortgage broker chime in.

Ultimately, the financing option you choose will depend on your individual circumstances and investment goals. It's important to thoroughly research your options and speak with multiple lenders before making a decision. Good luck with your first deal