Working line of credit - Posted by John

Posted by Ed Garcia on May 10, 2000 at 24:10:44:


Sometimes we can get curtain terminology confused. So far the way you have
described your current credit lines, they have nothing to do with a Working Credit Line
as I know one. You, yourself describe it as a Business Line, and a Personal credit line which to me, can be used for any thing you fancy it to. The cost that you are paying is ridiculous. It is definitely is not a working credit line.

Sorry to say Mike, but it’s not unusual for people to get confused when working with banks and going in and requesting a curtain line of credit, just to have the bank offer or give you what they have available, and try to get the borrower to accept it in lieu of their
original request.

So you see Mike, the average investor would NOT know the differences of the various
Credit lines. Someone with my background would, and that’s why I try to teach it to
folks such as yourself, and others in the business. I noticed this, when I was doing my first workshop and had several investors who would tell me, that they already had a Working Credit Line.

As I discussed this with them further, I found out that what they had was, an EQUITY LINE instead.

True definition of a Working Credit Line, is a line of credit, that the bank provides the
borrower, to purchase real-property as inventory, collateralizing the line with that inventory. Of course there can be variations of this type of loan, and that’s why you have
to be cautious when requesting such a line.

As a rule of thumb not always, the bank will request a BUSINESS PLAN, etc.

If someone plans to be successful in this business, then they should take it upon themselves to have an understanding of a Business Plan. Many people are intimidated by
just the thought of a Business Plan. They have no idea how valuable of a work tool this is
for their success. As a result they try to find someone to write if for them. Unfortunately,
much of the benefit of a Business Plan is lost if you have somebody else write it for you.
Spending time and writing it out, piece by piece forces you to do considerable thinking and evaluation of your plan.

I could go on and on about what it takes to build or map out your real-estate career to be
successful in this business. I’ve said it before, and I’ll say it again. If you run this business off of the seat of your pants with no rime or reason, no direction, you can still be
successful in spite of your stupidity. Can you imagine how successful you can be if you
do it with a GAME PLAN ( Business Plan).

Sorry Mike, sometimes I get carried away ( smile).

Mike, you ask, In your professional opinion, if I do as well with this prestige line of credit as I have done with my other lines, by the way they want to shut these lines down upon giving me the prestige line, can I go to Chase and get a new one without them asking me to shut down My Bank One account?

Mike, I would need to know more about the underwriting criteria of the line, your design
of the usage of the line, your personal qualifications etc.

Remember, every time you do something, you’re learning and growing. Each thing you
do, is just a stepping stone to the next thing you must do. So no Mike, I don’t think your
wasting your time going from one credit line to the next. I think it’s part of your learning
process. Yes, if you can hook up with someone that has been there before you, you can save yourself a lot of time, aggravation, and money for that matter, and that’s why we share this type of information with one another on this forum.

Ray Kroc the founder of Mc Donalds favorite cliché was, " As long as your green you’re
growing, as soon as your ripe you start to rot" so my contribution to that is, Let’s not rot,
but keep on growing. Don’t be afraid to try new ideas.

Ed Garcia

Working line of credit - Posted by John

Posted by John on May 08, 2000 at 21:27:35:

I’ve heard of investors who use a working line of credit to fund flipps and other investments. Can anyone recommed how to start with a bank or savings & loan?


Re: Working line of credit - Posted by Ed Garcia

Posted by Ed Garcia on May 09, 2000 at 10:22:38:


A Working Credit Line is AWSOME.

There are just so many advantages to having a working credit line.

(1) You can make CASH offers, allowing you more profit in your deal.
(2) You can CLOSE faster, making that extra deal, and more profit.
(3) You can SEASON your properties, by leaving them on your line for a while.
(4) You can use it to do FLIPS, where conventional financing is too expensive.
(5) It’s CHEAPER money, meaning you pay 1 or 2 over prime and no points
per transaction.

(6) You can make offers with more confidence, which is projected to the seller,
or Real-estate agent.

And the list goes on. First to obtain a working credit line, you must have a TRACK RECORD…
This would not be a financial tool for a Newbie, the Banks would not want a Newbie,
because of the lack of a track record.
As a rule, a Business Plan is required. I usually recommend soliciting a small local Bank.
The reason being, you can easily establish and build a relationship with a small Bank,
rather than just taking a number at a larger National Bank.

John, I teach people how to get a working credit line, and I can assure you that once you have one.
You won’t know how you did business with out it. There’s not a whole lot of information I can
give you in just one post other than to tell you that, if you think that you’re ready for a working
Credit line, I suggest you contact your local community bank, who I feel would be the best
candidate for you at this time.

Good luck,

Ed Garcia

Re: Working line of credit - Posted by Vic

Posted by Vic on May 10, 2000 at 24:27:14:


To get a line of credit like you talk about, do you generally need to have both good credit & high documented income, or is just good credit good enough?


Re: Working line of credit - Posted by MStevens (Tx)

Posted by MStevens (Tx) on May 09, 2000 at 19:45:04:

Believe me I would never doubt what you say, but I went to my bank to get a better and larger line of credit. Currently, I have a 35,000 business line and a 10,000 personal line. Business is prime plus 4%. Personal is prime + 5%. Business line cost 75.00-150.00(not sure) a year to maintain. They said they offer a Prestige line of credit that has no annual fee and is prime plus 2%. It requires 80k+ in income and at least 250k in assets(this is Bank One).

I am currently filling out all the paperwork to get this line of credit.

I figured before I fill all this out, get old tax returns, etc, I might check with a small local bank to get a better deal (maybe prime +1).

I went there and they said, oh we can’t do that only the large banks can help you. They (small bank) want the loans secured, whereas my Bank One lines and future line is unsecured.

What am I doing wrong? I turned around and walked off. I am going with Bank One!

In your professional opinion, if I do as well with this presige line of credit as I have done with my other lines, by the way they want to shut these lines down upon giving me the prestige line, can I go to Chase and get a new one without them asking me to shut down My Bank One account?

Thanks for all your great advise. Mike

Ditto on small banks - Posted by Rosie_FL

Posted by Rosie_FL on May 09, 2000 at 10:49:29:

Had lunch with my banker last week per Lenders workshop advice (she is the gatekeeper of my assets at NationsBank - oops, B of A).

I brought up the subject of working credit lines and she said “You won’t get that at my bank. You have to go to a small bank like XYZ Bank or ABC Bank.”

There it was - she gave me the names of other banks to work with! I like this woman; she told my mom not to get her auto loan from her bank because their rates were too high. “I” ended up financing my mom’s car! I created a note! Whoo hoo!

This banker also said she’ll play the Cashflow game. That should be interesting.


Re: Working line of credit - Posted by John

Posted by John on May 09, 2000 at 10:47:26:

Thanks for the response Ed. I don’t have much of a track record(# of deals) but have been doing this for a few years now and have very good credit & income. I’ll contact a few local banks and see what I can come up with…thanks again!