Posted by IB (NJ) on July 31, 2001 at 21:20:55:
The hard money I’m using is coming at pretty good terms in my opinion: 16-18% int. only and 4 pts. With the exception of paying the lender’s attorney fee, there are no other fees. I’d rather use my own cash for flips (if I need it) and to ensure my living expenses are covered as I adjust to my new life as a full time RE Investor.
And as you know, using hard or any borrowed money increases your leverage in the deal because you’re putting up very little if any of your own money. My situation is different because right now, I’m buying, fixing, and selling. I want to establish the cash flow first before I start getting into rentals.
On the two props. you’re considering, I woudn’t use a credit line to purchase. From what I see in REI, the credit line is more suited for flips and rehabs that you’re going to sell. This is because you can access the credit line anytime you need to and have cash available almost instantly. Pretty powerful if you’re using the promise of a quick closing to bring down the price when negotiating with a seller. The lender I’m using is promising a $200k credit line once I’ve done a few deals with her (I’m on my first one). This will be a big asset in my efforts to build a wholesale flip business. Especially if I rely on distressed properties like preforeclosures.