Lender · Ponte Vedra, FL · Member since 2013 · 28 posts · 5 votes
Starting a small business and the bank is willing to loan up to a $50,000 dollar line of credit with possibly a $50,000 dollar credit card. Interest rate on the line of credit is 1% plus prime and 5% plus prime for the card. Thoughts on what type of investing I should go from here ? I originally thought fix and flip with the line of credit, but am open to hearing about other creative options for Jacksonville, FL. Thanks in advance.
What you now have is an opportunity to develop your own business model that works for you, and I encourage you to decide how best to use this operating capital to meet your short and long term goals. The difference between the two strategies is whether you want cash or cash flow, and only you can decide that.
Jacksonville area has opportunities for both strategies. You can flip for under $100k all in, and make upwards of 15% per deal so long as you can find the right deals. If you want to buy and hold rentals using this capital, it will typically require a min of 6-12 months of seasoning with a tenant before you can refinance the property. There are deals for rentals to return between 10-15% ROI in solid neighborhoods.
Study the options that fit your goals, and find someone local to work with who has more experience and can help you evaluate deals. We have a local meetup group organized by @Erik K. where you can network. Best of luck.
I'd say buy foreclosures and other deals at courthouse auctions (In my town they are every Tues morn on courthouse steps). Then put some money into rehabbing them, and soon as you can, flip them.
I'd say buy foreclosures and other deals at courthouse auctions (In my town they are every Tues morn on courthouse steps). Then put some money into rehabbing them, and soon as you can, flip them.
@Fred Brauneck
I hear you on the buying low just to flip. But do you see any downside to just holding them and renting them after rehab ? I think after you rehab you could just refinance them and pull out whatever equity you put into them ? Maybe I'm missing something?
50 to buy and up to 50 to fix all the meanwhile meeting the monthly payments for each?
flip.
Assuming the rehab will be 50k it could be expensive paying two bills like that a month. I suppose flip seems like the immediate answer, but I know there is a way to do some buy and hold with this method as well, just gotta get creative.
buy yea and hold for what? how are u going to pay ur loan and card dues monthly, rent out the property u are holding? cant think of any other way, unless u have alot of steady income coming in which case where is the savings of it so far since u didnt mention adding any savings to ur loan for a higher sum of purchase power
buy yea and hold for what? how are u going to pay ur loan and card dues monthly, rent out the property u are holding? cant think of any other way, unless u have alot of steady income coming in which case where is the savings of it so far since u didnt mention adding any savings to ur loan.
I would rent and refinance the house after rehab, take the money out and pay off the line of credit. Rinse and repeat with the next property.
You may be able to fund the purchase with hard money and use the credit for the rehab once you have enough capital you will be on your own. I was also interested in hearing more about what steps you took to establish the line of credit? I am currently trying to build business credit and any advice would be helpful
You may be able to fund the purchase with hard money and use the credit for the rehab once you have enough capital you will be on your own. I was also interested in hearing more about what steps you took to establish the line of credit? I am currently trying to build business credit and any advice would be helpful
Thanks, Sam
Sam,
All I had to do was form a business with Florida and apply for a small business line of credit. I happen to have a steady income between my Wife and I plus we have great credit. Bank seemed fairly happy with this and was willing to extend a little LOC. Hope this helps.
oh cool buy a house with new business credit then refinance (against business credit?) against the increased value to pay of the original business debt, sounds doable.
how soon after u buy with biz credit do u think u'd be ready to refinance with biz credit?
You can buy and hold a distressed asset in TX and usually clear a 10 cap. I've done it with both rentals and seller finance. You also could flip a 50k house in some markets here and make 8k, with only about 10k in repairs. I've done similar flips here and resold them in 60 days.
Rentals sound doable and people have done it before. You would just need to make sure you get the house at a good deal and be sure you can refinance. It sounds like a good strategy as long as you get the numbers down.
Rentals sound doable and people have done it before. You would just need to make sure you get the house at a good deal and be sure you can refinance. It sounds like a good strategy as long as you get the numbers down.
Thanks David for the vote of confidence. I will start my search then.
What you now have is an opportunity to develop your own business model that works for you, and I encourage you to decide how best to use this operating capital to meet your short and long term goals. The difference between the two strategies is whether you want cash or cash flow, and only you can decide that.
Jacksonville area has opportunities for both strategies. You can flip for under $100k all in, and make upwards of 15% per deal so long as you can find the right deals. If you want to buy and hold rentals using this capital, it will typically require a min of 6-12 months of seasoning with a tenant before you can refinance the property. There are deals for rentals to return between 10-15% ROI in solid neighborhoods.
Study the options that fit your goals, and find someone local to work with who has more experience and can help you evaluate deals. We have a local meetup group organized by @Erik K. where you can network. Best of luck.
I do have a good Texas contact that put me onto good buy and holds, 55-65k, 12 cap, no maintenance on those as I just hold the note. I still hold some rentals, but I have started to like just holding the note on a house and letting the occupant maintain it, after I do a rehab.
Your posts seem wildly familiar and redundant. This post is about building a business line of credit. Not your owner finance deals through your contact in TX.
Thanks @William Byers , I will try and reach out to @Erik K. about the meet ups. I didn't even think about the seasoning time with refinancing, that's something to think about. It's good to hear that the deals are still out there in Jacksonville.
@Ty Downing thank you for creating this discussion. I side with the prespective that a lot of others have already provided within this forum; however, I did not hear the obvious/ traditional beginners method/approach mentioned.
That method/approach being:
1.) obtaining a good deal which equates to me at a minimum of 10-15% (the more the better) below market value based upon CMA (this approach protects you in the case of a slight market downturn)
2.) utilizing the business line of credit of $50k to make the 25% down payment (this down payment helps enhance the profit spread you will be able to collect each month in rent from your tenants minus your mortgage and loan repayment)
3.) Focus upon generating cash flow & actually build lasting wealth. You are ahead of the game in the fact that you have the cash on hand to make the 25% down payment.
**keep in mind that you will need 6 months reserve in your primary residence+ 6 months on your investment property **
@Ty Downing thank you for creating this discussion. I side with the prespective that a lot of others have already provided within this forum; however, I did not hear the obvious/ traditional beginners method/approach mentioned.
That method/approach being:
1.) obtaining a good deal which equates to me at a minimum of 10-15% (the more the better) below market value based upon CMA (this approach protects you in the case of a slight market downturn)
2.) utilizing the business line of credit of $50k to make the 25% down payment (this down payment helps enhance the profit spread you will be able to collect each month in rent from your tenants minus your mortgage and loan repayment)
3.) Focus upon generating cash flow & actually build lasting wealth. You are ahead of the game in the fact that you have the cash on hand to make the 25% down payment.
**keep in mind that you will need 6 months reserve in your primary residence+ 6 months on your investment property **
That's not a bad strategy to look at ... Sometimes we get so wrapped looking at being an all cash buyer that we look over other strategies.
Starting a small business and the bank is willing to loan up to a $50,000 dollar line of credit with possibly a $50,000 dollar credit card. Interest rate on the line of credit is 1% plus prime and 5% plus prime for the card. Thoughts on what type of investing I should go from here ? I originally thought fix and flip with the line of credit, but am open to hearing about other creative options for Jacksonville, FL. Thanks in advance.
-Ty
This is impressive for no RE experience. What banks approved you for these?
@Ty Downing I hope the information I provided helps. Please keep me updated upon your experience as I would be interested in learning how the different strategies/methods proposed actually work in the field.
Starting a small business and the bank is willing to loan up to a $50,000 dollar line of credit with possibly a $50,000 dollar credit card. Interest rate on the line of credit is 1% plus prime and 5% plus prime for the card. Thoughts on what type of investing I should go from here ? I originally thought fix and flip with the line of credit, but am open to hearing about other creative options for Jacksonville, FL. Thanks in advance.
-Ty
This is impressive for no RE experience. What banks approved you for these?
John,
This is still in the works, the line of credit is pretty much done but we are working the credit card out still. It's through Navy Federal Credit Union. Maybe a perk of being in the military? I'm not sure.
@Ty Downing I hope the information I provided helps. Please keep me updated upon your experience as I would be interested in learning how the different strategies/methods proposed actually work in the field.
Michael,
I will for sure keep you up to date on how things work moving forward. I can tell it's going to work well, just by starting this discussion I have already learned a lot and met some great contacts. I will make sure I post the first deal on the forums.
@Michael Johnson has the right approach. Not sure what the market is like in FL but using your credit line as down payment(s) you'll have a lot more to work with. Provided you can get the financing, you could purchase 4 units at 50k each (12.5k DP), then use your credit card for repairs/remodels. Place tenants, let them pay down the mortgage.
Former military here...we must try for a line of credit at Navy Federal. Wow. I've been doing this a long time and haven't had an LOC like that offered, unsecured. At any rate, I am doing a 5th mortgage right now...they only want one month reserves on the primary loan and 2 months for the investment loans. I'm not adding a whole lot, but reserves are a sticky wicket.
What you now have is an opportunity to develop your own business model that works for you, and I encourage you to decide how best to use this operating capital to meet your short and long term goals. The difference between the two strategies is whether you want cash or cash flow, and only you can decide that.
Jacksonville area has opportunities for both strategies. You can flip for under $100k all in, and make upwards of 15% per deal so long as you can find the right deals. If you want to buy and hold rentals using this capital, it will typically require a min of 6-12 months of seasoning with a tenant before you can refinance the property. There are deals for rentals to return between 10-15% ROI in solid neighborhoods.
Study the options that fit your goals, and find someone local to work with who has more experience and can help you evaluate deals. We have a local meetup group organized by @Erik K. where you can network. Best of luck.
That above is great advise. I feel the exit strategy always depends on the value of house and the available financing. If your marketing brings you deals to fix and flip, then flip them and reinvest the profits into cash flowing investments. If you get a great little deal you can buy for 30k and owner finance for 60k as-is, then that's an incredible ROI. Exit strategy to quicky pay down the debt then cash flow it for a while. If the house is in a great rental neighborhood, then rent it and refi in 6-12 months.