All Forum Posts by: Sam T.

Anyone else have any experience doing this? It seems from a quick scan of turo that what a lot of people consider "cool" cars (tesla, corvette, etc.) seem to rent for a pretty high rent-price-to-car-value ratio. A quick calculation indicates for example that a corvette stingray (can be bought for ~$40k) rents for roughly $150/day. If you financed the whole 40k, you'd only need to rent it for 5 days per month to cover a $750 monthly payment, then maybe a handful more at most to cover all expenses.

There are obviously some risks involved and it certainly wouldn't be as profitable long term as real estate, but this seems like it could be a fun side business/investment. Any thoughts and/or experiences to share?

Originally posted by @Chivas Miho:

Hey @Sam T.- I forgot to mention the negative impact to your credit score too.  If you're going to do this, make sure to avoid opening any new credit cards.  The way the credit score system works is the 3 biggest impacts are 1) on time payments, 2) credit utilization, and 3) average credit history.  #3 will impact your credit score first.  If you open 4 lines at once, you'll drop your average credit history.  Example: you have 2 credit cards now at 10 years old and 5 years old = average credit history of (10 + 5)/2 lines = 7.5 year average.  If you open 4 more new lines now = (10 + 5 + 0 + 0 + 0 + 0) / 6 lines = 2.5 year average.  Could drop your credit score some major points, but if you have excellent credit now, I wouldnt be too worried about it.    If you need more info - Credit Karma is a great resource for free.  

 Hey thanks a lot for the info. That's interesting about the 2% mandatory monthly principle repayment. I'll have to check with my banks before I apply, since that might be a deal breaker for me. Interest only (until I'd pay it all off in one lump sum after refi obviously) would definitely be ideal for me.

I'd find a lawyer in Jacksonville to help you with it. And/or if you're going to look for a new property management company to run it anyway, maybe try to find one that will be willing to start the business relationship by helping you with the eviction/removal.

You ask for the other wholesaler's permission. And if they say "only if you comply with x, y, and z requirements" then you comply with x, y, and z requirements.

@Jay Hinrichs @Jason D.

Good point guys. I hadn't thought about that, so thank you. I'll need to ask my portfolio lender if that would be a problem. Hopefully I could just sign something promising to use the cash from a refi to repay the LOCs if it would be a problem for them otherwise.

Any other thoughts and comments anyone?

Originally posted by @Jay Hinrichs:

in practice almost impossible to get those credit lines UNLESS they are secured by your real estate.

TRUE unsecured LOC from a bank is very very tough to get.. Very. at least at any large amounts and by large I mean 300 to500k ..

$300k+ would be awesome, but I'm only just starting out and would be very happy to get $100k in total credit lines. I only own one property currently which is worth ~$175k, but not much equity in it. I went to a handful of local small banks and CUs, and based on conversations there it seems like most would be willing to offer me $15k if not $25k or more in unsecured lines based on my credit and income. The goal would be to buy small residential properties for now.

I'm just trying to identify any holes in this plan before I execute it to know what I'm getting myself into.

Originally posted by @Jim Goebel:

@Sam T.

As in credit card?

As I understand it you'd have to use a merchant services such as square, etc to pull the money from a credit card.  There's fees in that.

There's also APR in that, typically. People have done this kind of stuff but every time I look into it I stop because it appears too convoluted to me.

 No, definitely not credit cards. I mean personal, unsecured lines of credit from which I could write checks. Like HELOCs but just with a (likely) higher interest rate and not tied to an existing asset.

I'm considering a strategy of applying for and (hopefully) opening multiple personal credit lines totaling at least $100k, and using them to fund 100% of my rental purchases & rehabs. This would be as an alternative to hard money. I'm thinking I can get personal credit lines of $20k+ from most credit unions and small banks, so at least theoretically I should be able to open a handful of those to use as cash to fund some deals (and then cash-out refi to repay).

Has anyone ever done something like this? I've never opened a personal credit line before so I have to assume there's something I'm missing and it wouldn't be as simple as I described above. Please share any thoughts and criticism.

Never again. Unless you BOTH just so happen to be extremely responsible, reasonable, high-quality, stand-up individuals, something will inevitably go wrong. And even then I'd still not do it.

@Fatima Champagne The main drawback that comes to mind is possible (likely?) evictions, unless you just get very lucky with the quality of the current tenants. So I'd mentally prepare for that. Is the property in bad shape, or just "meh" shape and you want to fix up up and make it top-of-the-line to force the value up?