What do you think about this Scenario? Talking to Lender tomorrow

[Michael Dunn]

I just want to run by my current financial situation, and get other's thoughts on what I can Expect to hear from my Lender tomorrow ..... More than likely 

My Situation:

I can not qualify for another loan ( Investment Loan ) , do to my DTI already being around 33 , and the Max being 45

So qualifying and getting approved for a $50,000 loan is a no go ( I was told this, from two different Portfolio Lenders in my area )

Soooo, this Leaves me at Looking to ( Most Likely ) get a HELOC via the Equity from my Primary

I'm assuming a LTV of 80% for the HELOC , which would give me around $22,000

Now, with $22,000 , this kind of puts me in a quandry, in that I really can't buy an Investment Property outright 

Well, I MAY be able to qualify for upwards of $26,000 - $28,000 IF I use my VA loan, to refi into , as I can get a Higher LTV with the VA

The reason i say a MAX of $26,000 - $28,000 , is that I can't qualify for more than this amount ( Even though I have $40,000 of Equity ) in my Primary .... Due to my Income , and the MAX on the DTI at 45% ,..... $26,000 - $28,000 is looking like the most I'll be able to get

I may then can do something with this amount , as there are a few Very Distressed properties in my area that I have been keeping an Eye on ..... Once I know I have access to the Cash at any time I need it via a HELOC, I'm going to submit in the Owners Mailboxes , the " Cover Letter " as mentioned in the " Driving for Dollars " thread , that is here on BiggerPockets.

If I can qualify for say $27,000 , and use the $6,000 in cash that I have saved up ...... I may can get this Property for $30,000 ( an ALL-Cash ) deal to the Owner(s) , which will hopefully look appealing to them, since this property has been vaccant and in a Distressed state for over a year now .  I can Put in the Letter.... " I can Offer you an all Cash Offer, which means , No:  Realtor commissions, no repairs and no closing costs "

Then use the Other $2,000 for an Appraisal on my Primary to get the HELOC , and the Closing Costs ( $1,000 or so ) ? Or is there NO Closing Costs with a HELOC ?

Just wanted to share what I'm going to run by my Lender tomorrow , but wanted to get other Member's advice and take on what I can expect to Hear , when I call Lender tomorrow

Thanks so much 

[Ned Carey]

@Michael Dunn that is not exactly "Instant" equity. You might be surprised haw fast Carrying costs can eat into your profit. 

How fast can you come up with the money for repairs? Fix a little here and there, does that mean you are going to do the work yourself? Do you have the skills.  This sounds like potentially a good wholesale deal, and that profit can be used to build your reserves for the next one.