Foreclosures / Auctions
Hi, if I have a decent amount of a business line of credit, how could I use that towards tax sales or auctions? The tax sales have a 2 year redemption period but with Auction.com I could rent or sell right away. Is it best to buy with the line of credit and then refinance that with a local bank for 15 - 30 years? What is a good strategy in using the line of credit to add rental properties to my portfolio? I would like to add 2-3 properties to my portfolio in the next 3 years.
Completely doable given the current state of the market. I'm not 100% sure if you can buy with a line of credit, you do have to have the cash on hand at these auctions.
A lender could chime in, but basically yes you would need to draw on those lines and take cashier checks to auction. Once you buy it cash, there are title seasoning requirements before you can refi I believe, so factor in those holding costs. (interest payments on your lines of credit). Also check with the lender on where you are today (how many mortages) and tackling 2-3 more mortgages will/might crush your DTI and you have to go DSCR route for loans. again, talk to a few lenders.
I would also mention, it is possible to flip the foreclosure buys, only keeping the ones that truly have a good rental potential. Not all properties make great rentals! you know, location, location..
