Almost 2 years ago, I was a finance director at a Dodge dealership in my home town. I had been building my rental business but soon learned that having to come up with 15-20% down on each house prevented me from buying at the rate I wanted. So, I asked my banker for a line of credit so that I could buy a house then refinance without having to put money down. The only problem was that I only had one house at the time and my equity in the house was not enough to secure a line of credit.A few weeks after I talked to my banker, a previous customer of mine came to the dealership with the awful news that her husband died. She asked if I knew anyone that would buy his truck. She expressed that she needed $10k for it even though the truck was worth $20k. I used money I had been saving for my next rental to buy the truck. I then refinanced the truck at 1.9% for $20k. So, I got my initial $10k back and had another $10k for investing.My next step was buying the Birmingham house using the $10k I received from the financing of the truck. I was excited because I didn't have to put any money out of my pocket to buy this rental! I hired a property manager to rent the house and I expected to just sit back and collect rent...the only problem was that the house was having problems getting rented.I decided to go by the house to see what was going on. It was a nice house in a great rental neighborhood. When I walked in, the house looked nice until I walked into the master bedroom to find a toilet seat in the middle. The master bathroom was missing the toilet (the property manager was supposed to have this taken care of). I was appalled that the property manager did not do what he was paid to do AND that he was showing the house to prospective tenants with a toilet in the middle of a bedroom! He was immediately fired and I was discouraged because I was losing money while the house wasn't rented.Luckily, everyone I know and meet gets to hear about my real estate goals. Someone that I worked with was looking to move out of his son's house and asked if I had anything available. I showed him the Birmingham house and he loved it! I eventually sold him the house making an $8k profit.Now, I had my initial $10k back in savings and $18k to use for investing. With the $18k, I bought two rental units at great prices and cash flow. The best thing is that the two rentals I bought had enough equity for my banker to give my company a $50k line of credit!With this line of credit I've bought 3 more rentals putting very little money down. I will be able to build my rental business much more quickly then if I had to put 15-20% down on each house.I hope everyone that reads this post will be able to use the financing techniques I used to help grow their business using $10k to get a $50k line of credit!

Eric SmithPoster

Omaha, NE

Posted Aug 30 2015, 11:02

Almost 2 years ago, I was a finance director at a Dodge dealership in my home town. I had been building my rental business but soon learned that having to come up with 15-20% down on each house prevented me from buying at the rate I wanted. So, I asked my banker for a line of credit so that I could buy a house then refinance without having to put money down. The only problem was that I only had one house at the time and my equity in the house was not enough to secure a line of credit.
A few weeks after I talked to my banker, a previous customer of mine came to the dealership with the awful news that her husband died. She asked if I knew anyone that would buy his truck. She expressed that she needed $10k for it even though the truck was worth $20k.
I used money I had been saving for my next rental to buy the truck. I then refinanced the truck at 1.9% for $20k. So, I got my initial $10k back and had another $10k for investing.
My next step was buying the Birmingham house using the $10k I received from the financing of the truck. I was excited because I didn't have to put any money out of my pocket to buy this rental! I hired a property manager to rent the house and I expected to just sit back and collect rent...the only problem was that the house was having problems getting rented.
I decided to go by the house to see what was going on. It was a nice house in a great rental neighborhood. When I walked in, the house looked nice until I walked into the master bedroom to find a toilet seat in the middle. The master bathroom was missing the toilet (the property manager was supposed to have this taken care of). I was appalled that the property manager did not do what he was paid to do AND that he was showing the house to prospective tenants with a toilet in the middle of a bedroom! He was immediately fired and I was discouraged because I was losing money while the house wasn't rented.
Luckily, everyone I know and meet gets to hear about my real estate goals. Someone that I worked with was looking to move out of his son's house and asked if I had anything available. I showed him the Birmingham house and he loved it! I eventually sold him the house making an $8k profit.
Now, I had my initial $10k back in savings and $18k to use for investing. With the $18k, I bought two rental units at great prices and cash flow. The best thing is that the two rentals I bought had enough equity for my banker to give my company a $50k line of credit!
With this line of credit I've bought 3 more rentals putting very little money down. I will be able to build my rental business much more quickly then if I had to put 15-20% down on each house.
I hope everyone that reads this post will be able to use the financing techniques I used to help grow their business using $10k to get a $50k line of credit!

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