Using LOC for purchasing rental property
6 Replies
Bethany Brookfield
Flipper/Rehabber from San Diego, CA
posted about 1 year ago
Any recommendations on LOC options for purchasing rental property?
Jaysen Medhurst
Rental Property Investor from Greenwich, CT
replied about 1 year ago
How do you plan to collateralize the LOC, @Bethany Brookfield ?
Bethany Brookfield
Flipper/Rehabber from San Diego, CA
replied about 1 year ago
@Jaysen Medhurst Ideally the asset being purchased. But curious to learn about different options available!
Clint Shelley
Surveyor from Dothan, Alabama
replied about 1 year ago
Hi Bethany,
i buy with a loc on each house. Bank does an arv appraisal and loans me 80% on a 6 month interest only. I buy and rehab until I hit the mark. If I over run then I'm in my pocket. After rehab, bank verfies I did the rehab as projected and covert to conventional mortgage. It's a sweet deal. Portfolio lender. Good luck.
Clint
Jaysen Medhurst
Rental Property Investor from Greenwich, CT
replied about 1 year ago
@Clint Shelley , so you’re putting down 20% and the rehab is out of pocket? Sweet if you can avoid two sets of closing costs.
Bethany Brookfield
Flipper/Rehabber from San Diego, CA
replied 9 months ago
Hi @Clint Shelley -
Thanks for the info! I assume you're typically purchasing around 70-80% ARV? So essentially the LOC covers 100% of the purchase, and then you'll use your funds for holding costs and repairs? Sounds great that you use the same lender for both the LOC and loan. Mind sharing their contact info?
Thanks again!
Clint Shelley
Surveyor from Dothan, Alabama
replied 9 months ago
I use Ameris bank in Dothan, Al. I'm buying and funding repairs with the loc until I nax out at 80%. Then I get into my money. Once the house is ready, I get a final appraisal and bank converts loc to 20 year mortgage. Pre covid. I have a land deal I'm selling, so I'm going to work that for a while and see what happens. Good luck.