Credit Line/Legal Advice - Posted by Jill

Posted by JHyre in Ohio on October 14, 2001 at 06:47:11:

Good answer. To add some- the decision to get a line of credit really isn’t a legally intensive one- I might post this on the main board for more responses. Chances are that the line of credit will be recourse (that is, you are personally on the hook) no matter if it resides with you or the corp. The only way I know of to get non-recourse debt is with property as collateral- and you will pay a relatively higher rate for that privilege. The first question is how much higher- and that research is for you to perform. The second question is- are the extra costs worth the peace of mind they provide? That’s a very personal question that depends upon your own tolerance for risk. Similar questions arise with the equity (expensive but flexible) versus debt (cheap, but not as flexible, often requires personal liability). The research is on you and the best choice depends largely on your perception of the risks involved vs. the costs of mitigating those risks.

Darned lawyers never give a straight answer!

John Hyre

Credit Line/Legal Advice - Posted by Jill

Posted by Jill on October 10, 2001 at 23:35:17:

Hello! Is it a good idea to get a credit line to do real estate deals? If I would get a credit line, should I get it in my name or form a corporation and get the line in the corporations name? It seems that either way I have to personally guarantee the line with my assets which really scares me as I don’t want to lose my personal assets.

Re: Credit Line/Legal Advice - Posted by Ronald * Starr

Posted by Ronald * Starr on October 11, 2001 at 22:44:35:


You might have picked up this suggestion from somebody else on CREONLINE.COM, but I wanted to get it to you and forgot it on the earlier response.

It may help you to meet some real estate investors so you can talk with them. One good place, if it is available to you is a local group of real estate investors. You can learn a lot about the local real estate situation. You will probably meet some investors who you will say about: “Gee, if that person can make good money in real estate, given that s/he is …blank…, then I should be able to do it. After all, I’m more …blank 2… than him/her.”

Good Investing and Good Luck Filling in the Blanks*Ron Starr

Re: Credit Line/Legal Advice - Posted by Ronald * Starr

Posted by Ronald * Starr on October 11, 2001 at 22:23:32:


I can not give you legal advice as I am not an attorney.

However, I do have fear so maybe that makes me qualified to give you advice about real estate investing.

I think that one of the biggest deterrants to many people investing in real estate is fear. One of the most common fears in humans is the fear of the unknown. And often this fear is unrealistic, unreasonable, and stops you from acting.

I would recommend that you plan to spend about a year to a year and a half studying up about real estate investing. Maybe take some classes at community college which are aimed at those planning to get a real estate licence. Read books and newspaper articlea about real estate and investing. Read postings on the Main Forum bulletinboard of CREONLINE.COM . You can learn a lot. As you read try to think about investment approaches that make sense in your location. And, even more important, in my opinion, feel comfortable or even exciting to you. Try to find one or two approaches that play to your personal strengths, interests, experiences, background, personality, and the like.

If you are at all positive about real estate invseting, after a few months you probably should start looking a properties in the area where you are considering investing. Your objective, I feel, is to learn about the different neighborhoods, the prices of properties, and what the demand for purchase and for rental properties is.

There is no need to rush. You will age at the same rate whether you are studying real estate investing or not. But, if you study, you will be very much more knowledgeable a year from now. Then your “real estate investing is unknown” fears will lessen and you can evaluate more clearly whether real estate investing is something you want to do. Not everybody likes it. No disgrace in that.

When you are more knowledgeable, you will probably be able to answer the question about lines of credit yourself. I like them because as I pay them down I am building up more opportunity to borrow in the future without having to go through more loan applications. They are easy to tap into. You also pay interest only on the amount that you have borrowed at any one time, not the total limit. However, the interest rate can be higher than for conventional amoritizing loans.

I suspect you will find that real estate can be a safe investment for the careful person who does not pay too much or get stuck with very high loan payments.

Whether it is for you, I can’t comment now.

Good Investigating**Ron Starr