Has anyone heard of lenders offering a 10x line of credit based on a held CD?
A friend in the flip business is currently negotiating to get a line of credit in the amount of 10 times the amount deposited in a CD and I’m wondering if anyone has experience with this type of arrangement (so he would put $100K in a CD and receive $1 Million in a credit line). In my initial searches I can’t find any lenders offering this type of arrangement.
This would most certainly have some sort of guarantee, be it personal or collateralized. Otherwise, it's probably some sort of scam...
I thought it sounded a little too good to be true. Thanks for the response. On a related note, do you have a particular process you use to screen lenders and determine their legitimacy? (Outside of the normal searching for reviews and such)
If there are no up-front fees (minus the appraisal), and they work with my title company, I am generally fine to proceed. Also, if they are offering out-sized terms that are no where near what banks in the same space are doing, then that is a red flag. Private funding is a whole different animal.