Whoa! That's quite a claim!
But, hold onto your hats. I'm about to hand out a power tip that
will TIP the money scales in your favor. What's more, it will do
this transaction after transaction and your savings will mount!
It's about saving money on what it costs to borrow money,
especially hard money. Let's face it, hard money HURTS! It's
crazy expensive and like taking a punch in the gut each and
every time I buy a property. Whomp!
On the other hand, if that's the only way to get things done,
you take it like a trooper and ask for seconds. Hard money has
changed my financial life. Let's be clear about that.
But what if there IS another, better, cheaper way?
What if I tell you that there is a little-known secret out there
that will allow you to get your hands on some serious cash...to
the tune of $20,000 to $200,000. If that got your attention, try
this on for size. What I'm about to reveal can provide serious
investment cash, and won't ding your credit report and keep you
from borrowing elsewhere...in other words it won't decrease your
ability to get cash-out refinance mortgages.
Okay, so here it is in a nutshell...
There are lenders out there that will extend businesses
unsecured lines of credit. The amounts and nitty-gritty details
vary, but these well-known financial institutions will happily
hand business anywhere from $10,000, $20,000, to $50,000 in line
of credit capital. You pay on what you borrow only when you
borrow it.
I closed a property last week and my loan about was $60,000. My
hard money cost me 4 points which came to $2400. This was for
the honor of using their money. In addition, the percentage rate
was $15%. Ouch!
If I would have used a line of credit to pay for that property I
would have paid NO points. The lender's fees ($600)...gone!
Percentage rate, about 7.5-12. I could have written a line of
credit check and that would be it! I figure I would have saved a
total of around $3200 on closing day with a line of credit, plus
some month-to-month cash with the better interest rate.
So what's the catch. Here's what I've found out. (As catches go,
these aren't too bad.)
(1) You have to be a legitimate company. If you are not, form a
corporation. Lenders have differing requirements for this, and
I'm not going to go into the varied types of corporations. In
short, if you need a company, make it so. It's easy.
(2) You have to apply...with no help. Lines of credit don't fall
into the scope of mortgage brokers, so don't ask. Contact the
lenders directly.
(3) In most cases, these lenders won't report these lines of
credit on your personal credit UNLESS you fall behind. So, don't
let that happen.
There is a lot more to using these lines of credits. If you
haven't guessed, I'm pursuing this realm of funding in a very
aggressive way. Saving $3-5,000 per property speeds me toward
the day that I self-finance. If I keep a single project going at
all times, that's 6-8 projects a year. If I can use lines of
credit for most of these, that's a savings of $25-$35,000 per
year. Heck, that's another income in some areas!
There isn't enough space or time to go into more detail. (If I
get started, I'll be at it for page upon page.) I'm not going to
list institutions that offer lines of credit. Start with where
you bank and other banks in your area. It will take some
searching, but you will find them. The good news is that there
is a lot more information, including lists of lenders, here:
http://www.rehab-real-estate.com/rd10.php
So, investigate lines of credit and save some serious closing
table, in-your-pocket cash. It will take some knowledge and
determination, but the rewards will be well worth it! I will
also report my findings as I learn.
About the author:
Bruce W. Ford is the editor of
Rehab-Real-Estate.com
. Get his important Special Report entitled "
12 Things Real Estate Investment Gurus Won't Tell
You" at
Rehab-Real-Estate.com
.
