Personal Line of Credit

[Deforrest Ferguson]

Is it a bad idea to use a personal line of credit to fund a down payment on a rental property ?

I have very little cash on hand and I’m eager to get started on my first deal. I know not to rush into this thing or I might end up with a bad deal but I just been trying to figure out strategies that could work for someone like me

[Nick Monge]

Personally, I recently got two PLOCs to fund deals. However, these deals that I'm using the lines for are NOT buy and hold. They're quick fix and flips. I want to be in and out rather quickly. 6-9 weeks max. I then pay off the PLOCs and pocket the profits. This is my strategy for building more personal capital for future deals.. I do have other sources of funding. But if I need to act fast on a property for cash, PLOC is definitely a good option. It depends on your goals and strategy really. If it's strictly for buy and holds.. I would advise against it.. But that's just me. Unless you can BRRRR it and pay off the line fast.. But then again, a lot of bank require seasoning periods (6+ months).

I do have a lender that offers a program where they will fund 90% of the total loan amount (PP & Rehab), you only put down 10%.. This is good for the BRRRR strategy. Lets say you get a house for 50k, it needs 20k in work and the ARV is 100k.. You would only put down 7k (10% of 70k needed for the job) + closing & origination fee. WHAT I LOVE about this lender, is they DO NOT REQUIRE A SEASONING PERIOD and the fix and flip loan gets converted to a 30 year fixed right after appraisal is complete, after rehab.. So in other words, when you roll it into the 30 year fixed, you remortgage the house and pull the money back out.. pay off your Line and cash flow..