How to pull equity out of a paid off property

[Amber Seel]

We have a SFH that we are currently renting as two one-bedroom units. The property has zero debt on it and most recent appraisal was for $187,000. We attempted to DSCR this property to pull out equity but were told by the lender (and two other lenders) that DSCR would not be possible given that the home is not appropriately zoned for how we are renting it. Is there any other way for us to pull equity out of this property without selling it?

[River Sava]

Hi Amber -

Typically, DSCR loans require that the property be legally conforming to its current use. For example, if it's being rented out as two one-bedroom units but is only zoned as a single-family home, lenders might view it as non-compliant. This can create challenges because the rental income might not be recognized in the same way, affecting the DSCR calculation. As others have mentioned, you might want to look at getting it rezoned in order to be compliant.