I am looking to start rehabbing. I have a 750+ FICO and 27k in equity. I have a partner and we obtained a 50k LOC from a major bank (also a M/C for rehab expenses) but I would like to add to that so we can purchase properties in the 100k-120k range (max profit potential in my area). Should I try another LOC from a different bank? We can qualify for a mortgage, but this seems like an inefficent way to finance (as does hard money). No source for finding investors. Any suggestions?
- National Cities (aka Accubank)
- Community Commerce Bank
They will normally lend on 70 -75% of the finished ARV… usually that is 100% financing if your profit is 25 -30%…
What is so inefficient about getting a conventional mortgage and using the LOC for repairs?
on a noo property, you can get a heloc for 80% ltv depending on the bank. if the heloc is on an oo property you may be able to go upto 125 or 150%, with higher interest rates. if you have credit cards that have enough of a credit limit, you could get the cash from those also. i recently purchased a property using credit cards and some cash(mostly from the credit cards though), and then got a heloc from a local bank. eventually you might want to look into getting a blanket line of credit from the commercial side of a small local bank.
OPM= Other Peoples Money: why tie up your own capital to finance repairs when you can you that money to tie up other properties in additional purchases…
Thanks for the replies. I wanted to avoid mortgages because I feel it will hurt my credit score, which is pretty good now (if I flip 1-3 houses a year thats a lot of inquires/loans and extra debt). The LOC I have now is a busn line on the partnership (not my direct credit, just guaranteed, which is ideally how I would like all the debt to be), but is only 50k. I got that on my score alone since the partnership is new w/ no history. I think I could get it up to 100k after I flip a few and have busn income to show. I live in Texas and HELOCs are illegal on NOO houses.
Do most of you use mortgages? Thanks!