What Questions to ask Banks re: LOC

[Justin Silverio]

I'm meeting with 4-5 banks next week to get an LOC. I have a number of properties that I am using to secure the line. What questions should I ask them when I meet.

[Chris Martin]

First of all, I'm assuing the person you are going to see at these banks is from the commercial side of the bank. The residential lender side will talk to you about a LOC tied to your personal residence (usually referred to as a HELOC) but not for >1 property.

The off the top of my head obvious questions are:
what draw limits can I expect?
when do I need to "renew" the line?
do I need to bring the line to rest? If so, how frequently?
do you require escrows or reserves set aside?

The not as obvious questions you should ask:
Do you need an appraisal on all properties?
what is the process for collateral substitution?
Do they have performance requirements for the collateralized property?

Appraisals for all properties can cost you a ton. The bank may work woth you on an income valuation rather than comparable sales... depends on your draw limit and their comfort level with you. Just let them know you are trying to keep a lid on your costs... they should appreciate your position.