Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
3y
There's a lot of LOC options without knowing specifics… for example Fund and Grow advertises business LOC growth. Many banks even credit card companies have options too. E g Chase bank … fairly easy. You can even get set up at Lowes, or your flooring store.
Pro's: keep cash reserves to make payments, use leverage on rehabs, get foot on door to then grow LOC's, non traditional lender may not care about seasoning of funds
cons: lower entry amount is likely, if personally guaranteed your utilization rate can hurt credit, traditional lenders will need seasoning on funds if transferred from loc into main acct
Financial Advisor · Flower Mound, TX · Member since 2018 · 659 posts · 479 votes
3y
Hey @Tanya Ansari, another LOC you can explore is Margin. You can get a Margin LOC or Loan against any taxable brokerage account you own. These are fairly easy to acquire as there's no underwriting or credit checks involved. You simply login to your brokerage and withdrawal what you need on Margin. Typically you can get a LOC of 40-50% of your portfolio's size depending on the investments you hold and brokerage. Rates are pretty low as well, with Interactive Brokers being the most competitive at 3.91% - 4.58%. If you or your advisor plans it right, you can build a portfolio that generates enough dividends/interest to cover your Margin LOC interest rate. I've used this strategy before for renovating STRs, and have clients that do the same. Here's an article on this strategy.
Great strategy! I have clients that do it all the time. The advise given above it crucial, but the system is simple. I have clients who get multiple unsecured lines of credit, it enables them to cover down payment, renovations and more. The line doesn't appear on your credit report and can easily be transferred into a checking account. Rates run at prime+, but it's a great entry point and leverage tool for many investors. Shoot me a DM if your interested in talking.