Irving, TX · Member since 2013 · 45 posts · 6 votes
Hey all, I am a beginning real estate investor and just received a line of credit from a private lender for 100k. My wife and I have about 40k in savings for just real estate. I am honestly not sure what the best route to do with the line of credit? I like the idea of flipping homes, and I really love to the idea of buy and hold long term investments. I just dont know how to incorporate a line of credit like that in to a buy and hold strategy, besides paying all cash for a property and doing a cash out refi at the 6 month mark. Just wanted some thoughts about what some experienced investors would recommend.
I would leverage the line of credit to the extent possible and use it as down payment and closing costs for as many properties as I could get my hands on, using additional private money/hard money loans to acquire the properties. I would put tenants in each of them as fast I could, sit on the entire pool for 24 months and roll all of them into a portfolio loan somewhere, pulling out enough of my equity to pay off the financing. Then I would repeat the process again....and again....and again...until I had the portfolio I wanted to have. the $40,000 in savings would stay right where it is...you'll need it for reserves, vacancies and peace of mind.
@Charlie Fitzgerald Awesome! Well said and the same model I am following. I think the key to helping your portfolio grow quicker is when money on hand is leveraged. The only caveat as you stated is not being over leveraged and keeping reserves at all times. Also making sure the investment is a properly vetted deal.