So I used short term business credit (Business Credit Card) to purchase a Townhouse. The asset is in good condition and cash flowing nicely. The issue I have is that my intro rates on my card are expiring and I would like to have a longer term loan. My original goal was to re-finance it into a traditional fixed rate mortgage after a year. A major challenge I have is that the townhouse is not worth over 50K. It seems 50-75K is the minimum that a bank will loan on. I wasn't aware of this prior to the purchase.
So now I'm in a pickle. I don't want to hold the balance on a credit card with a high percentage rate. My question to the group is this: What creative ways can I use to have a more stable longer term loan on this asset? Here's some of my options i thought of listed out:
1. Credit Card Shuffle. Just keep transferring balances to cards with intro rates. This is high maintenance to me and even though the intro rate is low there is still a transfer fee. My risk is that card companies may stop with intro rates at anytime leaving me holding the cost at regular credit card rates.
2. Find a private lender to just write a note for 35K for a fixed rate and term and be done with it. I have several other units and I have over 4 years experience in REI. I have an 800 credit score and high paying day job. I think I am an ideal and safe candidate for someone to loan too.
3. Find a traditional bank that will loan on an asset under 50K. I don't like this idea because I then will have a mortgage against my name for such a low amount. I plan on buying a 4 unit soon and want to use my mortgage allowance on larger deals.
4. Use a Business Line of Credit. The challenge here is to find a lender or bank that can allow me to do this. Any recommendations?
5. Use non bank entities. I'm thinking of capital groups that are out there that do asset based lending. I'm intrigued by this idea. From what I have seen, these groups will not loan on anything under 50K either. So I'm back to being in a pickle again. Perhaps I'm looking at the wrong companies?
Any other ideas or referrals that the group here can make? Let me know your thoughts!
You seem to be looking for a perfect exit from a bad situation. It ain't gonna happen. Stop rationalizing reasons why you don't want to do any of the solutions you listed, pick one, and live with it until the opportunity arises for that perfect exit.
@Joe Villeneuve Thanks for your response.
1. HELOC on your personal residence
2. Credit Unions often have more flexible loans
3. SD IRA
@Chris Conde I definitely wouldn't do the credit card shuffle. I think you'd be best getting a regular mortgage from a smaller bank or credit union. I got one once for only $38k, 6% for 10 years fixed. I also wouldn't worry too much about it using up your available mortgage eligibility for future purchases. The mortgage amount would probably only be $300-400 or so per month.
@Tom S. I appreciate the response. I'm thinking the same thing. Just a regular mortgage with a local bank.
If you have a "high paying job" you should have no issue paying an extra $1000 or $1500 over the rent to pay down your credit card. You will have to shuffle one more time, but you should have the hosue paid off in a year or two. Just put everything to paying off the house. With great credit and income, you dont need "creative" ideas. Just pay it off out of your current income.
@RickPozos thanks for the response
@Chris Conde Have you ever thought about blanketing this property with 1 or 2 of your other ones? Yes, most lenders will require a minimum of $50-75K, but if you blanket several properties, that minimum drops significantly.
If you blanket, minimums go from $75K in LOAN AMOUNT to a $50K VALUE. That's literally cutting minimums in HALF.
One property at 75LTV / minimum loan amount ($75K loan on $100K property) would be the same if you blanketed two properties at $50K (value) each.
Does that make sense?