I am seeking some "what would you do" information. If you were in the process of gaining your first property and were approved for a 40K business line of credit, would you buy a SFH (there are tons of under 40K homes in Memphis, TN) or use some of it as a down payment for a SFH, or maybe take a totally different direction?
Have you looked into doing BRRRR deals? If you can pay cash for your remodel and purchase you can effectively turn the same cash over and over again. The tricks are going to be finding a local community bank that will allow you to do C/O Refinances with a 75-80% LTV and buying deals where you are all in for less than 75% of ARV. If you're able to tick those two boxes you're off to the races!
Have you looked into doing BRRRR deals? If you can pay cash for your remodel and purchase you can effectively turn the same cash over and over again. The tricks are going to be finding a local community bank that will allow you to do C/O Refinances with a 75-80% LTV and buying deals where you are all in for less than 75% of ARV. If you're able to tick those two boxes you're off to the races!
Memphis, TN · Member since 2015 · 35 posts · 30 votes
8y
Definitely plenty of houses under $40k here in Memphis. Me personally I would use the business line as a down payment source to pair with bank\private financing. Doing this will allow you to leverage your remaining funds as a backup in case surprises occur.
I am seeking some "what would you do" information. If you were in the process of gaining your first property and were approved for a 40K business line of credit, would you buy a SFH (there are tons of under 40K homes in Memphis, TN) or use some of it as a down payment for a SFH, or maybe take a totally different direction?
Thanks in advance for your opinions. ;-)
I started with small multifamily. I bought a 4 plex with 25% down and a conventional mortgage. The problem was that after I made that down payment of about $45,000, I had very little money to keep expanding.
I had to use multiple lower money techniques in order to grow over the years including:
-401K loan for down payments on three properties
-FHA owner occupied 4 plex with 3.5% down
-Conventional mortgages with 5% down on 2 single family homes that I owner occupied and later turn into rentals
-BRRRR method on one home to get all my cash back and buy another property
The next thing I'm doing is either refinancing or selling a property in order to get way more units. I want to double in size next year from 10 to 20 units.
My point for you is that buying a single home and using all of your money to do it could limit your growth.
@Anthony Gayden Thanks so much. I appreciate your detailed response. I was actually denied for the line of credit ;-( I am working on Plan B for financing, trying to avoid using my own money as much as possible.
@Dee W. Thank You! It looks like down payments are the way to go. ;-)
@Vashaunna Dixon You’re very welcome. Sorry to hear you were denied. How is your personal credit? If it needs work, perhaps you should look into building corporate credit while you take care of your personal credit. That way you can maximize your borrowing potential. There is cash credit available without a personal guarantee through your business. However 0% interest lines of business credit with a personal guarantee could work as well.
Miami Beach, FL · Member since 2017 · 9 posts · 6 votes
8y
@Dee W. Hey I like your strategies my man. How do I go about getting a business credit line so I can get a loan for a down payment and get a private or hard money loan and get into my first flip.
I do not have a business, however, I am a full time realtor for the past two years. My credit score is decent. Where do you think I can start?
Private Money Lender · Tampa, FL · Member since 2018 · 54 posts · 16 votes
8y
@Brian H. Hey I'm unable to send you a message via pockets, I keep getting an error. Do you mind sending me an email or giving me a call or providing me with yours so I can send you one? - see below
@Dee W. Hey I like your strategies my man. How do I go about getting a business credit line so I can get a loan for a down payment and get a private or hard money loan and get into my first flip.
I do not have a business, however, I am a full time realtor for the past two years. My credit score is decent. Where do you think I can start?
I appreciate any feedback
First things first. You’ll need good credit to apply. Typically 680+. Here’s a good place to start. https://www.creditcards.com/business/. Most offer a 0% introductory APR anywhere from 6-18+ months. That is what you will pair with your hard\private money. If you don't have good credit, you can build corporate credit while working on your personal credit. There limited sources of corporate cash credit available but they are out there. Ive secured a MasterCard solely based on my corporate credit reports without a personal guarantee that I use for my current credit management business.