Newbie has line of credit... - Posted by Brian

import · February 10, 2002, 8:13am

Posted by brian on February 12, 2002 at 13:55:07:

We secured the LOC through our home equity.

import · February 10, 2002, 8:13am

Newbie has line of credit… - Posted by Brian

Posted by Brian on February 10, 2002 at 09:13:23:

I have invested many hours reading/reviewing and talking to folks about jumping into L/O, refurbs, etc. My partner and I will be jumping in and start to have fun!

We currently have about $100k line of credit. We like the idea of l/o, but would also like to refurb and act as a bank to new tenants. Yes, the idea of lower initial investment $$ is appealing with sandwich l/o, but we want more of an equity stake and owning the properties and positive cashflow.

ISSUE: My partner and I are about to be offered severence packages from our 9-5 jobs and enter into handy-man work for ourselves.

QUESTION: Since we no longer have our 9-5 jobs, how detrimental is this going to effect our ability to secure funds to purchase/refurb with traditional lenders? We are developing a killer business Plan, too. I understand hardmoney may be an option, but would like to steer clear as we start out.

Any assistance is greatly appreciated!

import · February 12, 2002, 12:35pm

Re: Newbie has line of credit… - Posted by Chris O. (Seattle, WA)

Posted by Chris O. (Seattle, WA) on February 12, 2002 at 13:35:49:

You say you’re “developing a killer business plan.” Key word being “developing.” How’d you get that line of credit without a plan, or with a plan not completed? Did your current nine-to-five jobs have a play in getting your LOC? Did you already have a decent LOC and relationship with the bank you’re using? Please tell me more about your process for establishing your credit line.

Thanks,
Chris O.

import · February 10, 2002, 11:42am

Re: Newbie has line of credit… - Posted by Kevin

Posted by Kevin on February 10, 2002 at 12:42:58:

I think the answer to your question is in the subject line of your post. Isn’t that why you have a line of credit? To acquire properties? Just starting out, you may want to consider reselling your properties after rehab to replinish your line of credit and help to capitalize your business. After you have a few deals under your belt, I doubt traditional lenders would have a problem financing the properties you want to hold and rent out. Then, you would be replenishing your line of credit (that you used to make an all cash purchase) with conventional financing (with better, longer terms) rather than having to resell your properties to pay back the line. I guess this is something to address in your business plan. Seasoning may be an issue for some traditional lenders, but if the LTVs are low and they like your business plan I don’t think you’ll have a problem.