Hi BP members,
I am on here in search for some advice from those smarter, and more experienced than I. I will explain my situation a little bit, and after that I will state my question.
I am 22, and I just closed on my first rental property (November, 2017). I acquired this rental using basic conventional financing, %25 down, 30yrs fixed, at 4.5% interest. The market I am in is a low price point market, the purchase price of this SFH was $42,400, and it needs no work. All in all, I am all in at $13,000 out of pocket, and am getting $825 in rent. My PITI payment is $257/Mo, and I have no fixed expenses on top of that. My wife and I have 2 credit cards, we keep the balance below 30% of the limit, and pay them off every month, for credit building purpose (they are low credit limits). We still rent an apartment for now ($500/Mo), so other than our rental, we have absolutely no debt (no car payment, no student loans, nothing), and the only other expenses we have are our personal utilities, and car insurance. Our combine gross monthly income is $4,800-$5,200 (I know people ask questions a lot, and get many "it depends" answers; I am hoping that by being as descriptive as possible, I can enable the best answers possible). I have been at my current job for 4 years; my wife has been at hers for 3 years, and after our first rental purchase, we currently have $6,000 left in savings. We have not yet formed a "business", or a business entity, but we did fill out a DBA (Doing Business As) form, in order to use a separate name, and account.
Now that we are done with buying this first property, I want to buy many more in the coming year, but I need funds. I plan on using the BRRRR strategy going forward, so we can keep rolling over funds, and building equity. I am wondering if anyone has any financing ideas that I could use going forward? I am mainly curious about how to obtain an unsecured line of credit. I would really like to stick with the bank route if I can. Does anyone know any options I may have?
If I go the bank route, what kind of documentation and paperwork will I need when I go in? I want to be as prepared as possible when I first approach them, but I want to know exactly what I'm looking for first, and have any paperwork that I may need in order!
I appreciate all of you taking the time to read this, and would appreciate any ideas and advice.
Thanks in advance!
Always have your last two years' tax returns, and the last several months (three to six) of banking statements available. Whether you are trying to get a loan for a new restaurant, or a new apartment building, you will need these.
Consider paying down those low-limit credit cards to about 1-2% of the balance. Also consider getting a secured credit card or two to help build your credit profile.
Continue building your reserves for both your real estate business, and your emergency fund for your personal finances.
@Terry Miller , Thanks for the advice!