Best options to use the equity in the properties I already own?

[Taylor Wisnewski]

I currently own 3 rental properties (1 free and clear), in addition to a primary residence and secondary residence. The three rental properties were purchased in my name and then deeded into the LLC that I use for my rentals after the transaction was completed. All the rental properties have a positive cashflow of at least $500/month.

On a somewhat unrelated note, I recently left my W2 job as it just wasn't the best fit for me. I still own 20% of the business I left, but I am not an active employee. As I consider changing career paths, I'm liking the idea of making real estate investing my full time job.

I estimate that there is about $800,000 equity between the 5 properties. I'm trying to determine the best way to go about getting some of that cash out for the next deal. A HELOC on the home that has the most equity in it sounds like it might be a good option. The bank I work with most often also suggested a commercial loan using 1 or 2 of the properties as collateral (although they said "they're not doing much of that type of lending for real estate right now").

Since my debt to income ratio is now thrown off, I'm thinking raising cash from private lenders might be best right now but I hate to see all of the equity sit there. Any suggestions here?

Thanks in advance!

[Mark Munson]

Hi @Taylor Wisnewski

If a traditional bank won't refinance you due to your DTI, then you can use a DSCR loan. Depending on how much equity you are trying to access, you may only need to collateralize one property. The lower the loan to the value of the asset, the better the rate (assuming good credit). DSCR loans avoid any DTI issues as pay is never considered. You won't be able to touch any equity in the primary and secondary home, as those as owner-occupied properties and DSCR loans are for investment properties. Feel free to message me, happy to walk you through any options or give you some feedback on what to expect.