Hammond, LA · Member since 2019 · 63 posts · 27 votes
Newbie here. Going to look at at potential rental property; 38k for 3.5 acres, 2 bed, 1 bath. Rural area so I’m assuming will rent for 650-750 monthly. I have enough cash for a 25-30% down payment, but an older investor advised me to get a 50k line of credit through the bank for the purchase. Has anyone done this? Is there any advantages? It seems to me that a line of credit interest rate is higher than a mortgage rate.
It’s likely irrelevant....to get a business line of credit, you need an established business, for years, that is actually generating income and profit.
As for getting a mortgage, it is extremely tough to get a mtg under $50k. Your best bet is your local small bank or credit union.
Thanks for the reply. The investor actually advised using a local bank. He claimed that’s where he started without an existing business. He just told them he wanted to start investing.
You may get lucky with a smaller bank willing to offer you a line of credit so that you can make a cash offer, rehab the unit if necessary and then refinance into a longer term mortgage. There was a recent BP podcast that featured a woman name Ashley who said that she was able to utilize this strategy recently. I believe she did already have some rental properties though which may have made the bank more comfortable with her.