Down payments on a line of credit

[Owen Thornton]

I have been reading a lot about creative financing and funding loans through other methods than just paying the 20% down payment. I have been quite interested in how some people use credit cards and small personal loans to pay for down payment. I was curious how this would work… Can you do this with a DSCR loan or with specific private lenders, I would assume it would be a private lender who doesn't care where the money is from.



Can you get a business loan for a down payment and then use it for a private lender? In the end of the day you would make small cash flow but I feel like if you were able to go about these creative means you probably could build a very large portfolio pretty quickly.

I read that some people have many different credit cards. Some have 10, 20, 30, and use it for everything from repairs to down payment… Would you have to use a cash advance for a down payment, and at that point even with a business credit card wouldn’t that be very expensive?

I would imagine that may be a small business loan would work, and do it under an LLC, but would that be some sort of fraud to use it for a purpose other than your "business." Or would it work since RE is your business.

Could you take out a personal loan for a “large purchase.”

Would love to hear about some creative ideas from you guys, things that are not as traditional, like FHA loans and portfolio lenders.



[Chris Levarek]

@Owen Thornton Sure you can do this, question is, is it worth it for the deal? Those kind of private debt lenders will have high term rates, thus only really benefiting for short term flips, brrrr's or quick turnarounds where capital is recovered plus profit.

My first BRRRR, I borrowed 20k from my bank at 16%. Did it work, yes. Was I worried for 6 months it took to do the BRRRR, yes. Just depends on if it's worth it for the deal and your stress level.

Now if the deal has such high income, such as a short term rental, high private debt might be worth it...Again, down to your agreeable level of risk.