Thoughts on BLOC 12% Loan for Holding Costs
Hey BiggerPockets community! I’d love to get your thoughts on a deal I’m working on and my financing strategy. Appreciate any advice or insights.
Here’s the breakdown:
Property Details:
Purchase price: $40,000
Rehab budget: $60,000 (lender holdback)
ARV: $175,000
Financing:
I’m getting a fix & flip loan with the following terms:
Loan amount: $100,000
Interest rate: 12%
Origination fee: $3,000
Processing fee: $450
Interest-only payments: $1,000/month
6-month term
Rehab holdback: $60,000
I also have access to a Bloc [Business line of credit] loan (secured against my rental property, NOT the flip property) with:
Loan amount: $35,000
Interest rate: 12%
Term: 3 years
Secured by my rental property
No other fees rather than 3% app fee.
My plan:
Use the fix & flip loan to cover the purchase + rehab, and use the Bloc loan strictly for holding costs like interest payments, insurance, utilities, taxes during the rehab/sale process. I’m planning to sell the property after rehab (resale exit).
Estimated profits after all costs (including loan fees, interest, selling costs) are around $40k–$50k.
Questions:
1. Do you see any downside to using the Bloc loan (12% secured against my rental) as a buffer for holding cost?
2. Any potential risks I’m overlooking?
3. Would you approach this financing differently?
Thanks so much for your insights – trying to make sure I’m not missing anything before I move forward.