Line Of Credit – Good or Bad?

[Whitney T Redfield]

Hello BP,

I have a question for you all, and a scenario that has been presented to me.

Is a line of credit (LOC) good for someone with great credit but no capital to invest? Obviously partnering is the best option, and I may do a combination of LOC + Partnership; but, I need to bring something more to the table than enthusiasm … especially since I work full time.

Here's the scenario. I've been contacted by someone on BP and offered a LOC. I haven't signed anything yet, but I've been pre-approved for $100k-$200k. The exact amount will be disclosed once the application has been submitted. The credit will be through a major lender; i.e. Citibank, US Bank, American Express, ect. Technically this firm is a middle man, classified as a credit agency. The company has a strong relationship with lenders. They take 8% off the top … so, if I get approved for $150k, I have access to $138k. I've been told that I can apply for my own line of credit with all these lenders, but that the amount I will be offered would be more like $10k, not $100k. I get 18 months at 0% interest, but will have to make the minimum payments. The company can work with me to convert the credit into cash with no fees from the lender … I've been told they have experience with this. Essentially, I can flip a house within 18 month, pay back the LOC and keep the profit. Once the LOC is paid back, I can do it all again with a new LOC and the 18 months starts over with the new LOC. If I do this enough times, I won't need the LOC because I will finally have my own cash to invest.

What do you all think? Is this something that is common? Have any of you ever used a LOC? Is this a typical LOC? What should I be asking this company?

Please let me know what you think … I would really appreciate it!!