Line of Credit?

[Rick L.]

A close friend of mine in the banking industry has pointed out that I should open a line of credit using a recent appraisal of a property I had refinanced demonstrating considerable equity. He's stated I would be able to attain about a $40k line of credit using the properties' equity. He's stated to me that the line of credit is similar to a credit card, but I'm able to write checks for whatever I want.

I have no experience with using a line of credit, but would welcome others experiences and opinions.

[Chris Adams]

I use a LOC which allows me to make all of the offers on the properties I purchase cash, and then I turn them into end loans when the house is rented. Be certain you have a end game in plan prior to using the money.

Basically if you borrow 40k from the line to purchase a property, how are you going to pay back the 40k. A end loan mortgage is what makes the most sense, but dont get caught having to leave money from the LOC in the deal to cover the down payment.

LOC is typically much much lower interest that cc's also. I would highly recommend the LOC as a tool, as long as you use it correctly.