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