First Deal closed. Question on LOC

10 Replies

Hey everyone! 

After 2 years surfing BP i finally pulled the trigger and closed on my first multifamily property in upstate NY in a college town. I would like to thank BP and everyone for all tips and tricks. I have both apartments already fully rented for the Fall Semester, I am in the process of painting and doing minor repairs. My partner and I were throwing around the idea of taking out a LOC of around 5k which will cover floating the mortgage for the summer months since students dont move in till end of august. the mortgage taxes and insurance comes out to about 950 a month. So instead of bleeding out savings accounts floating the mortgage we thought about the idea of a LOC since the interest is tax deductible anyway. Please let me know what you think about this and if you have any tips or pros and cons. Thanks everyone!

Also to add. We have the money to float the mortgage we just thought it would be a better idea of saving that capitol for our next project. 

The costs for a LOC won't make sense for $5k, even if the bank would write such a small amount. Also, they'll only lend up to about 80% FMV, less your 1st mortgage of course.

@Anthony Favoroso

What town did you buy in? In Albany I know investors get income year round as leases typically start in June, even if the students leave for the summer.

Steve, the house is in oneonta. I bought it with no tenants. But the upcoming students did sign a 1 year lease. Thats why i have to float the mortgage till i get that first semesters rent.

Wayne, we would need about 4k we figured, but we thought we could get a Loc for more and not use it And just let it sit for reserves. Our idea behind this was again save capitol for future projects 

Anthony -

Congrats on your first deal. Mind sharing any details (financials) on it and how you found the deal? I'm also just starting out. Casting my net pretty wide. I've got 150K pre-approved from a lender and about $10K cash in the bank. Looking to move on a SFR or duplex.

Thanks for your time - and again congrats on the first deal.


Thanks i appreciate it. Yes those were the numbers on my deal. Do you know what area you would like to look to purchase? what part of arizona are you in, whats the market like out there?

Congratulations on the deal @Anthony Favoroso

Sourcing money will be a lifelong hunt as an investor so never stop searching for better LOC terms than you can get at a conventional bank. Not to boast, but I had been offered, after a long time of searching, an unsecured business LOC for a very handy at amazing rates. Funnily enough, I wasn't even searching for that at the time but I was at a networking event and I just happened to rub shoulders with the right guy.

You need to have that liquid cash ready for your next deal otherwise you are just waiting for your money to come back and then looking desperately to put it into the next investment vehicle. I think it's smart to stay liquid if you can.

In Albany, the leases for students are yearly, beginning June 1 of each year.  

Obviously things could be different there, but are you going to miss the majority of students looking to rent for NEXT year?

Meaning if you're not looking for tenants for June, will you miss the bunch?

Hi, I am first investor looking into investing on a multi-family unit in a decent area (close to Albany Med, Saint Rose). I am looking for a low/moderate investment with low renovation cost. Any tips/ideas would be very helpful in my approach.

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