30 Year Fixed and LOC

[Logan Marienau]

Hello Everyone,

Hopefully I put this post in the correct place. I just had a thought come to me. I'm currently saving up money for my first rental. SFH or small multi. My question relates to financing. I'm looking to purchase a property around the $100k mark. Put down anywhere between 20%-50% dependent on the situation at the time. And then have $10k in the bank as a buffer.

Will banks do a 30 year fixed rate loan and then also allow a LOC for the equity I have in the property for emergencies?

Just a thought. Any feedback is welcome! Thanks! Logan

[Brian G.]

@Logan Marienau sure you could get a 30 year fixed loan and a Heloc on that same rental (up to 80% LTV) but you need equity in the property to get a Heloc by adding value and/or getting an under market deal or putting a 30-40% down payment when you purchase (but what's the point of that?). To capture value by purchasing and executing a value add deal you would most likely need to purchase with cash (your own or opm) and later refi into a 30 year fixed but it's extremely difficult to successfully create 30% equity on a value add deal, without which there is no equity to secure a Heloc.