Good day everyone,
I purchased a condo upon my graduation from college. I currently am the owner of the property and purchased it 3 years ago with the intent of it being a rental property one day. I have been paying upwards of $100 extra on my mortgage to help build equity fast. In 5 years I would like to purchase a house with my equity but also retain the property as a rental.
My proposal is this:
I would like to establish an LLC. I want the LLC to purchase my condo, that way I can get the equity I've put into it to make a nice down payment on a new house for my family. At the same time I would be retaining the ownership of the condo which I can then rent through the LLC.
Can anyone give me some background as to whether or not this is at all possible. What does the LLC need as a down payment on the condo (I assume 20%). Is it hard to get a loan this way? has anyone done this?
Thank you for any replies that may come.
Hi @Will Brown
You do not need the LLC to pull your equity out of your condo. You just have to cash-out refinance. You would still leave 20% equity in the condo because the banks want 80% LTV.
Condo Market Price = $100,000
LTV of 80% = $80,000 (Market Price * 80%)
You can take out $80,000 minus what you still owe. So if your mortgage is at $30,000 then you can take $50,000 cash.
LTV - Debt = $50,000.
Hope this gives you the idea.
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