Does Anyone Just Keep a Line of Credit Ready for the Next Deal?

Question

I’ve always thought of financing as something you figure out once you actually find the property. But if you’re buying pretty regularly, wouldn’t it be easier to already have a decent line of credit sitting there ready to go?
No scrambling for a lender, sending everything over again, or wondering if you can close fast enough. Obviously you’re paying for that convenience somehow, so I’m curious if people actually do this long-term. For anyone doing multiple deals a year, do you keep financing ready in advance or still get a new loan for every property?

Jay Hinrichs · Answer

I have a true unsecured high six figure line and I use it all the time.

Jay Hurst · Answer

Yes. I always have at least one line of crefit open.

Robin Simon · Answer

I think the main hurdle with this strategy is all the restrictions on "cash-out refinances" most lenders have - there are some "delayed financing" options but unfortunately (likely as an anti-fraud measure), its not as seamless as it should be to simply buy with LOC funds and then quickly and easily convert to fixed rate perm debt afterwards

Mike Grudzien · Answer

I keep a $200k HELOC, with 0 balance, for quick moves.

Henry Lazerow · Answer

Yep!

Erik Estrada · Answer

Yes both lenders and investors do this. The key is to pay it off quickly.

David F. · Answer

Yes!

Nicholas Floyd · Answer

I’m a big believer in having capital lined up before the deal shows up, especially if you’re doing multiple acquisitions a year. A business line of credit can give you flexibility for deposits, rehab costs, carrying costs, or unexpected expenses without having to start the funding process from scratch every time. I also like pairing that with other options, such as 0% APR business credit cards when appropriate, so you’re not relying on one source of capital. The key is setting the funding structure up while your financial profile is strong, rather than waiting until you’re under a closing deadline.

James Driscoll · Answer

The reply about delayed financing restrictions is right, and that friction is worth naming more precisely. With a standard cash-out refi, most conventional guidelines require you to own the property for at least six months before you can pull equity out, so if you buy with a LOC expecting to pay it off quickly, you could be carrying that balance and its rate for half a year before permanent debt replaces it. The delayed financing exception exists specifically to get around that clock, but it requires you to have bought with documented cash (no mortgage on the property at closing), the new loan can't exceed your original acquisition cost plus closing costs, and the title work has to show no liens. It works, but it's tighter than people expect, and any gap between what you drew on the line and what the new loan covers means you're still exposed on that difference until you address it.

James Driscoll

Does Anyone Just Keep a Line of Credit Ready for the Next Deal?

Does Anyone Just Keep a Line of Credit Ready for the Next Deal?

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