Loan Advice for a First Time Investment Purchase

[Paul Lyet]

Hello, first time poster here. I wanted to reach out and see if I can get some advice on a loan offer from a local bank.

A little about my situation first.. I currently own what used to be my primary residence in eastern PA. I moved to Los Angeles in 2014 and put the property up for rent using a property management company. This was my first step into real estate and I quickly saw the benefit of owning rental property. Since that time I have been saving money, payed off my mortgage, and continued learning as much as I can about real estate investing while holding a full time 9-5. 

Recently a unique opportunity has sort of fallen in my lap where a good friend, also a real estate investor, has vetted a home in eastern PA but is now in a situation where he cant make the purchase, so he recommended I look at it and while it doesn't make the 2% rule there are other attributes that seem to make this a sound investment. (Shout out to the BP Calculators. Huge help)

So, my intentions were to find a local bank that would offer a line of credit on my existing rental and pull equity to cover half the purchase while I came in cash with the rest, allowing me to keep the payment very low and put all income from both properties to pay off the loan in the next few years.

Here are the details..

Current single family property appraisal is roughly 150,000 currently renting for $1299/mo
New single family property sale price is 108,000 and estimated rent of $1350/mo (Not currently a rental)
My hope was to put down 50K and pull remaining from current property equity then paying off within 5 years. I thought this could be done with heloc but bank is telling me that as a renal this is not an option.
Also may be worth mentioning that I will be purchasing this new property within an LLC.

What the bank offered was a strait mortgage loan 5.25% but based upon the rental income of the new property, estimated at $1100/mo based on zillow. I would have to come in with $59,000 unless I want to also put a mortgage on my current property. If I'm open to mortgaging both they can offer up to $106,000 where I would only have to come in with $2000 obviously. Would never do the latter but thoughts?

I would really just love to hear some opinions on this, preferably from PA investors if it matters. As of this moment is feels like I'm getting worked. I could be wrong but something feels very off with these numbers, and while that bank i'm working with has been great personally, the explanations to some of my questions have been somewhat ambiguous.

Also, I want to ask what type of loan is best for a situation like this and has anyone worked with any good independent PA banks? Not asking specifics just what should I be expecting?

Really any advice would be much appreciated and thanks in advance for all the great information from you guys in this bigger pockets community. I've been diehard on the podcasts for a little over a year now. Such an amazing resource.

Truly Thank You,
Paul