business lines of credit?

[Mr. Ocean]

First I'd like to say hi, and thanks for reading. I'm a newbie, but eager.

Does anyone know if this is possible... I would like to use business lines of credit with an llc to buy properties cash. (120K-150K). Rent/lease-option (hold) the property for no more than 3 years.

Is this a hml? What kind of rates can I expect with a 680 score? Is this realistic?
Maybe I'm looking in the wrong direction? Please help :iconfused:

[JOHNNY Q]

Regular financing no problem.I do all type of loans commercial and hard money too. No need to go hard money.
Doing two commercial loans right now under llc. Will you personal gurantee the loan.?How much down or any down? Please do the not use the word rent,  please use lease option for legal reason. Please explain your business goal and theory and I will  reply  to see if your plan is feasible.

Sucess is the perfect exection of basic fundamentals!. Lets get you fundamental down first. Let's put the horse first and carriage second.

[Mr. Ocean]

Hey John-

I guess my goal would be to able to pay cash for these homes (one at a time) and Begin the lease option process. Holding the property 2-3 years max. Downpayment? As little as possible.
What kind of rates can I expect. Or LTV? I do have some cash, but would rather not spend it ya know. Any suggestions?

I'm just kinda new to this. Thanks your your patience John.

[Lily]

!

[4EEM]

As a rule of thumb use a rate of 10% for your calculations when looking for 100% financing.  Lower rates are available, but generally you will not see institutional lenders with rates above 10%, otherwise they just turn down your loan application.  No one can give you an accurate quote without a 1003, appraisal/purchase contract, needed income/employment/asset documention, etc.

[Mr. Ocean]

Thanks Patrick. Lets say I have to personally guarantee the loan ... will that hinder me from future purchases? Basically, does this show up as debt on my personal credit report? ???

[4EEM]

Yes the mortgage will show on your credit report the PITI (principal, interest, taxes and insurance) will be factored in as a liability in the future.  The liabilities are offset by income.  Lender will credit 75% of the lease amount as income.  So, lets say the PITI is $750 and the lease is for $1,000, in this case the liability and the income are balanced and your overall DTI will be the same as before you purchased the property.

[Mr. Ocean]

so as a general rule I should try to add 25% to my costs to keep the DTI ratio the same. I see.  I better find some really good deals to be able to pull this off. Thanks again.

[4EEM]

As a rule of thumb your PITI should be no more than 50% of your lease if you are looking for a good ROI as a buy and hold investor.

[4EEM]

As a rule of thumb your PITI should be no more than 50% of your lease if you are looking for a good ROI as a buy and hold investor.

The rule of thumb applies to 100% financed projects.

[Mr. Ocean]

50%? That sound nice but where am i going to find houses that cheap? This seems like a needle in a haystack. Maybe I'm just not being optimistic. I dunno?

[4EEM]

50%? That sound nice but where am i going to find houses that cheap? This seems like a needle in a haystack. Maybe I'm just not being optimistic. I dunno?

The same way pawn shop owners get gold. diamonds, etc for $0.10 on the dollar...stupid people and people with problems....that's not a needle in a haystack...throw a rock and you'll hit a few.  Maybe your market is over bought.....look for people that owned their homes before "the boom".

[Mr. Ocean]

Well I'm going to start doing some rock throwin and see what I can hit! Thanks Pat!

[4EEM]

Here is a hint.  Look for people going into foreclosure who have 25-30% equity in the property.  Most of these people cannot get out of the foreclosure in time.  Offer to puchase the property from them at the price they owe and then lease it back to them with the 25% markup on the lease.  Give them an option to purchase the property back from you within the next two years at 90% of market value.

[Mr. Ocean]

These preforclosures are public notices right? So just go to the recorders office?