Line of credit, cash, private money mix-up...help!

[Miles Stanley]

I'm trying to come up with creative ways to finance future deals without burning through all our capital. We (my wife and I) have a couple lines of credit totaling about $95k max (I don't want to over utilize these, they are more of a backup). We do have cash available to purchase, but I still prefer to minimize our cash out of pocket at any given time so we can grow. For now, we are using conventional financing to purchase. I'm not opposed to using portfolio lenders, by I don't see the need as long as I can get conventional/confirming loans. Want to avoid HML unless the property is too run down to get lending from a bank.

i need a little help focusing the lens so to speak bc I think I can come up with something creative, I just need a little advice.  I'm interested in using small amounts of private money (friends/family) to help fund a down payment and/or repairs.  I'm not interested in giving up equity stakes, but would be willing to offer a return on any money lent to me. 

Another thought I had was to treat the lines of credit as my personal private lender since the interest rates aren't too bad. I realize that I would have to make the mortgage payment in addition to the LOC payment, so the cash flow would be low, if not negative.

I could see this being feasible in a BRRRR scenario, but I think using LOC's on a straight up purchase might be too costly since the only way to pay back the LOC is by milking the cash flow dry. In brrrr I could redo and pay back the loc's and be ready to go again.

Has anyone used a combination of these tactics to any success?  Again I feel like I'm close to having another way (or 2) to find our future deals, just need some help getting these ideas organized.

Thanks!

[Craig Curelop]

Hi Miles,

I highly suggest you read Brandon Turner's book on investing with no (or low) money down: http://get.biggerpockets.com/nomoneydown/. He describes a variety of ways to purchase a property with no (or low) money down. One of the last chapters describes ways in which you can use a combination of the methods explained in earlier chapters to creatively finance the deals. 

If you don't want to forego equity and also don't want to put money down. I would suggest finding a private lender (i.e. a wealthy colleague) and offering them 6% or 7% return on a loan (sure is better than dealing with the stock market) to help you with the down payment. Then you can use their $$ for the down payment and you have a house with no money down. 

Hope this helps.

Best,

Craig