I'm new here but would love some input. I'm working on an offer on a duplex, which will be my first deal in southwest Ohio (north of cincinnati), and I'm working through options for a down payment. I only have about $4k cash at the moment, and need about $30k. Does anyone have recommendations or contacts of lenders that could help with a personal line of credit? I own my house by got an FHA so I don't have a ton of cash to pull out of it, or else I would do a HELOC.
Would love some feedback, advice or recommendations.
Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
7y
I see a few problems with what you're asking about doing:
If most of your down payment comes from a line of credit, then this will likely throw off your DTI ratio. You may want to talk to a lender about that.
As @Kyle Rountree mentioned, an unsecured LOC will typically be quite expensive.
You will not have any cash reserves. The lender will want to see 6 - 12 months of cash reserves (which you definitely need, in case any CapEx repairs come up, or you go through an eviction, etc...).
I would recommend you try to find a passive partner who is willing to finance the deal in exchange for equity (say 50%). Half of a deal is better then no deal at all.
@Kyle Rountree I figured that a LOC would come with a higher price tag. I'm just trying to explore some options. I'm actually in Hamilton (between cincy and dayton) near Miami University! Are you close?
@Kris Wong you bring up some legitimate concerns! Thanks for your input, it's definitely something I need to consider. Just getting eager and impatient to make a deal; don't want to wait a year to save up for the DP! lol
Investor · Cincinnati, OH · Member since 2016 · 21 posts · 7 votes
7y
Yep! I'm pretty close. My office is out of Fairfield. Smaller banks/credit unions will most likely have the most favorable terms if that's what you go with.