Am I missing something? I've got North of 150k in sfh's with my LLC. I want to get a business loan, 5 year term, 15yr amortized, around 7% APR: rougly 70k loan. LTV would be 70%. I WANT TO DO A FLIP!! 5 years studying.. I feel prepared. In the event I don't pull the trigger ..I just pay the loan back...RIGHT?? possibly eat some holding costs.
Side note. I met with a financial broker recently. Suggested I might apply for multiple credit cards at once, through him..at 7-9% acquisition cost (woaaaa) of total credit requested. When credit cards come, I would pull cash off the cards, at 0%apr, 0% cash advance, 24 mths. Sounds plausible. This a big NO NO??
@Erik Garland , "7-9% acquisition cost"? Haven't you seen ads for similar, free Credit Cards on telly? So yes, a big NO NO! I'm curious: how did you come across this "broker"?
[Based on the info you gave us, there should be plenty of Asset-based Lenders out there for you, who won't require upfront loan fees!] All the best...
@Erik Garland , it appears that your business is far too small for an unsecured business loan. Years ago several banks were promoting business lines of credit, but requirements were business profitability off 3 years or more. Most lenders do not consider investing in SFHs to be a business, they consider it an investment. so, they'll lend secured against the property. If you have great credit (740 FICO +), a lot of liquid assets, and a steady income, you would probably be able to get a business loan with a personal guarantee.
your best bet is to do a flip the conventional way - find the property, find a hard money residential lender that will finance. If you do not have $ for the down payment, you will have to find an equity partner. You may decide that after paying the cost of capital, the projected profit is not enough to offset the risk and time committed.
@Brent Coombs Thanks for the response. Yea... I found this guy through a contractor...hehe...he's a pretty good salesman...but I'm sure he saw the skepticism written over my face.
@Don Konipol Thanks Don. Secured loan against my properties with Personal Guarantee is EXACTLY what the lender is offering. I'm certainly okay with that. Once again, if I pull the trigger I will be sure to have plenty of wiggle room. I will likely over borrow a hair to alleviate repayment strain. IN and OUT 3-4 months. ;)
With your advice, I will take a second look into hardmoney. However, with the secured business loan, the payment burden (lack thereof) appeals to me more. No early payoff penalty, etc.
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