Applying for a RLOC to flip houses

[Will Coleman]

Howdy all, 

I am looking into applying for an RLOC (revolving line of credit) in order to flip houses in the DFW area. I am looking for some advice. I currently have two houses with some equity that I could use as collateral but I would rather leave them out of the equation. My question is this, if I create an LLC as the borrower for the RLOC and I have an individual with a high net worth be a guarantor on the RLOC and I show a strong business plan outlining the cash flow from the purchase and sale of properties will the bank feel comfortable lending to me not using the houses as collateral? Has anyone done something similar to this?

I am thinking a $200k RLOC, would look for houses under $100k needing about 20-30k of rehab with an arv of at least 50k more than purchase price. Those are just rough numbers, let me know what yall think! 

[Bob Okenwa]

Hi @Will Coleman. I've talked with several banks and credit unions and they all seem to be in the same boat of wanting to see 2 years of LLC history. I've had some that wanted 2 years of tax returns as well, personal guarantees, and revenue minimums. My advice would be to pick up the phone and start making calls to local community banks and credit unions and see what kind options they have for you. It may be pretty difficult to get a 200k LOC for your brand new business with no business history. You may have to try getting a personal line of credit or use the houses as collateral (even though you said you don't want to).