Hello, I am just starting out and have my first property renting out bring back around $900 a month while no maintenance or other issues arise. I didn’t have to put the 25% down since bought it as an investment property but with that, to have around 100k in equity and I’m trying to figure out the next steps,
Is there any way around having to wait the 6months to do a heloc or cash out, and when I do to actually do it is there any way for banks to not look at income as a factor if wether or not I am approved?
Also, what is it about an LLC, should I get one to put this property under, and a different LLC for each future property?
My plan is to use the equity starting out for a profitable fix and flip or 2 then obtain another rental property, I’m just so confused with the equity because how am I to keep being approved for the loan with having so many open? And with just starting out not having much source of income rather than my personal job, Thanks and sorry for all the questions, I wish I could say that’s all but no where close.
Real Estate Agent · Central New York · Member since 2023 · 207 posts · 96 votes
2y
As far as not having "income" to get approved for a regular loan, you could get a DSCR Loan or hard money. For the DSCR, some lenders require a period of prior investing in order to qualify for that loan, for example one prior year of investing. Typically higher down payment and higher interest, but an option nonetheless. As far as the LLC question, that's a personal question you need to discuss with your attorney or CPA. It's going to be highly dependent on your situation, assets, etc. What works for one person might not make sense for another
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
2y
Lowest rates to pull cash out are conventional sources, particularly if you owner occupy the house. Conventional mortgages require higher FICO, reserves (money set aside to pay the loan), tax returns...just on that note, they typically won't count any income from the property rents until that money hits your tax returns for 2 years.
As the other poster Kiernan said, you can look at DSCR mortgages/HELOANs and know that the rates will be higher. They use the income from the property and your FICO score, and sometimes the amount of reserves you have.
You don't need an LLC to get started. Some DSCR lenders prefer an LLC to hold, some don't require it. DSCR is a business-only product, so you cannot owner occupy. Get an LLC when you have a lot of assets to protect.