Posted by charles (del) on August 18, 1999 at 08:45:06:
i have a line of credit attached to collateral of my personal. I happen to have a ton of equity in it though.
Sounds like they will base it on the properties that you hold at that time. hopefully you can avoid appraisals each time.
remember to allow them a high interest rate if they are being creative. My line is 9.75% which is high but for what I am doing the flexibility value is tremendous.
idea. maybe you can offer to hold your IRA or business checking account at their bank.
Hello everyone.
I have a situation with a local bank that wants to sit down with me to discuss the possibilies of giving me a working line of credit. We discussed how the line of credit will work and they understand the flexibility that I want, meaning I don’t want to go through the whole underwriting and mortgage processing every time I buy a home.
The bank is open to ideas. They said that some way or another the line needs to be secured by the assets of my company and what I buy. Can anyone suggest something for me to propose to the bank that protects their interest and accomplishes what I am looking for?
Why not consolidate the equity of some of your keepers into one or two (or more) properties. Then just open equity lines on them. Last month US Bank was running a special on equity lines of prime + zero for the life of the loan.
That works out to be great short term funding at a little over 8%…and all you have to do is write a check. No supporting docs at all…
I had a $200K credit line with a small bank (until they got bought by Norwest) for buying and fixing houses. The way they set it up was that they’d put a 1st mortgage on the property I was buying. Total amount financed had to be no higher than 75% LT(after repair)V. They’d want me to actually have 25% of my own funds. There was no other security required. I did have to furnish full financial statements, and had to sign personal liability. I had my business checking with them too.
I had to put a second private mortgage on the house after closing to get my cash downpayment back.
It was a revolving line of credit, so that if I used, say, $60K for a purchase, I’d have $140K left for other deals. Once I paid it back, I’d be back to $200K. They’d escrow money for repairs and release it upon completion.
The entire $200K was pre-approved in writing, subject to appraisal . I had a letter on file from them, so I could include it with the quick cash offer, if I wanted to impress a seller.
It was overall a pretty nice little deal. Of course, when the big fat Norwest took over they told me “they did not have that program available.”
I’m not sure we have enough information to help you, i.e. are you purchasing houses to flip or hold, or are you purchasing the notes on houses? If your going for a working line of credit they should beable to use the value of the property as collatoral if you give them a set of guidelines that you will be using and it meets with there approval. Its all negotiable.