How do people get LOC's for investing?

Question

I see several posts on people who receive LOC's (not heloc) to finance their BRRRR properties.

How are they finding funds for this? Is it personal or business line of credit.

Can someone provide a basic example on how to do this?

William S. · Answer

I've read several posts that investors are receiving unsecured LOC's. I have yet to find this.

Ryan Henderson · Answer

I've done this with my SFR's. I think you need several things:

1) Good credit score

2) A bank willing to lend with investment property as collateral

3) Equity in the investment property (my bank will do 80% LTV)

Terms right now are 4.25%, but the rate floats so you might want to watch that given rate increases going forward.

Joshua D. · Answer

@William S.

We use a LOC secured by one of our free and clear rentals that we buy most of our brrrrrs with.  100k arm 5.5%. Revolving line. Interest only.

Just got approved last week for a 45k unsecured line @ 7%

They are super handy tools. But you have to be confident of the refi... you really don’t want to get stuck in those. They are just tools.

Check out my podcast with BP for more info on what we do.

Kyle Varner · Answer

I'm planning on applying for several lines of credit soon.  I'm a physician, and there are several banks that offer personal, unsecured lines of credit specifically for physicians.  I used one of these in residency and it worked out well for me, but is now paid off and closed.  Also, in my research, I found that SoFi and Wells Fargo offer lines of credit to anyone with good credit score and income.  So those may be options for you.

John Leavelle · Answer

Howdy @William S.

I have both.  The LOC is a personal LOC through a local Credit Union which I have numerous accounts with for over 30 years.  The HELOC is with a local bank.

Lindsey Crawford · Answer

I think Ryan Henderson, has it right. It will be hard to avoid paying the down payment on an investment. If you can come up with that, it would help. Also I'm sure many of these individuals are well established in this game. That's the largest hurdle in my opinion is getting to that level. It may take a couple of years but the determined will succeed .

Lindsey

Aaron K. · Answer

Usually it will be because they have several rental properties that generate enough income to do this and I believe most of the stories you hear on BP will be business lines of credit based on rental properties that the investor currently owns.

How do people get LOC's for investing?

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