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.
