How about a Hard Money LOC (Line Of Credit)?

3 Replies

Hello my BP colleagues 

I will like to know what your thought are on this one?

I met this Hard Money guy at a REI meet up and He mentioned this product that quickly cough my attention.

A Hard Money LOC (Line Of Credit) based on your net worth. See Details below.

This product can get you 10 time what your net worth is. Meaning if you have 100k cash in your bank acc you can qualify for 1M.

It doesn’t have to be cash in the bank, it could also be equity in a property. In case of equity they will have to do an appraisal on the property which process can take longer.

Below are the fees of course:

Lets use round #s

100,000 X 10 can get me a LOC of 1,000,000

  • A onetime activation fee of 1% of that = 10,000 and that is after LOC is approve.
  • 3% draw fees. for example if I use 100,000 of my 1 million dollar LOC I'll be facing a 3,000 fee.
  • 12% interest rate on the draw amount. In this case 12,000 per year, 1,000

My first question to this lender was You don’t get to keep my 100,000 hostage as a collateral correct? His answer was not so i’m good there.

I have many questions for the lender such as is this LOC made to a LLC? which I don't think so. This will be a personal guarantee most likely.

I’m still at preliminaries stages on it. If you think of any specific question I should ask this lender before committing to anything just bing it. I just wanted to put it out there and see what your thought are.

A good advise is always welcome.

Can you please update us on what the LTC on the LOC for acquisition and Rehab?

@Rafael C. I would be worried about upfront activation fee of $10,000. Generally, all reputable offers or lenders do ask for big upfront amount. There are exceptions of course. Just saying..

Sorry, do NOT ask for big upfront amount

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