A hard money alternative you may not have considered

[James E.]

Hi BPers - figured I'd share my recent success finding ~100k in financing using a method I haven't heard discussed frequently.

Believe it or not, there are several banks out there that will give you a personal line of credit based primarily on your credit score and income. Think of this as a big credit card with much lower interest (my LOC's are in the 9-11% range). For those of you with W2 incomes and good credit, this can be a great alternative to hard / private money for a few reasons:

1. No points! Although the interest rates are similar (if not slightly below) hard money, saving on points can be huge. 

2. A line of credit means you're only paying interest based on usage. If you need to draw for unexpected capex expenditures or cover part of your downpayment as a bridge until you sell or refi, this is a convenient way to manage working capital.

3. While the application process can mean a lot of paperwork (especially if you want to count rental income in your DTI calculations), the closings are a breeze, and you won't pay the closing costs associated with secured loans that involve collateral recordings, attorney fees etc...

So far I've been able to secure personal LOC's with Citizens Bank, Santander Bank, and Key Bank. Others that I've checked offering similar programs include Wells Fargo and Suntrust, although I wasn't able to apply based on my location.

Hope this helps and let me know if you are able to take advantage of one of these programs!