Is this strategy valid?

[Zach Diamond]

Hi guys, being as I don't have a substantial net worth (~$10,000) but do have 2+ years W-2 history, solid W-2 income, and I currently don't pay anything for rent/housing (DTI currently is 0%) I believe I would qualify on paper from an income perspective for a $350k-$450k mortgage on an investment property. However I don't have the funds to cover a 20% down payment and closing costs right now. My question is, if I use an LLC to acquire the rental property, can I use debt to fund the majority of the downpayment & closing costs? Specifically, 0% 18-month business credit card debt from another LLC, so I'm not paying exorbitant interest. My thinking is that I will use my W-2 income to pay down the credit balance over the next 12-24 months and effectively speed up the process for me to get in the game and potentially even start cash flowing.

I know it's not permitted to use debt for down-payments on conventional loans for owner occupied properties, but what about LLC investment properties? Any thoughts would be appreciated.

[Michael Dumler]

@Zach Diamond, if one system malfunctions and needs to be replaced you're essentially screwed. More debt, more risk, that's how it goes. I concur with the advice noted above, save for another year until you have enough for a downpayment as well as reasonable property reserves.