Re: Ed, Terry - What is Working Line of Credit? - Posted by Ed Garcia
Posted by Ed Garcia on April 06, 1999 at 11:09:34:
There are many things you have to present to the bank.
Yes, you should show them your past deals along with a working plan.
The Bank not only wants to see what you have done in the past, but
what are your intentions for the future. In many ways this gives the
bank the ability to see how much you are going to be using the line
of credit that they give you.
That is important to the bank because they make their money on our
usage of the line. If they see that you are not that active and maybe
buy one or two properties a year, they may not be to excited to give
you a line. On the other hand if they see that you are active and are
utilizing your line, allowing them to pick up fees and make their
money on the line, then they will bend over backwards to help you.
If an investor does a deal here or there, then the line may not be for
them. Many of our investors do deals on an on going basis, and a
working line of credit could be extremely valuable to them.
It can allow you to make better deals, because you can make cash
offers to the seller. Also in a hot market, the seller will not be as
acceptable to take a lease-option .
It can allow you to do more deals, because you can close faster and
give cash to the seller, who may not be in a position to carry-back,
or do a lease-option.
It can give you better costing on your money, because the bank will
usually charge you two over prime.
It will give you confidence when making offers, because the seller
will know that you have a way to go. Many times when you offer a
lease option to a seller, the seller thanks that you don?t have any
money and are not for real.
Sheik, I hope that this helps.