Hypothecated properties to buy a 4plex?
Calling all smart people! I have 8 free and clear properties but have a lack of $$ to continue and talked to a bank I have used in the past. We are doing a hypothecation agreement using two properties I own as collateral and mortgaging the 4plex on a 10yr business loan Amortization. The benefit is I can leverage 80% of the ltv indefinitely at the same rates. They’ll also give me an opening Line if credit should an issue arise. So zero down deal, nothing invested on any side. 5% loan. 1900monthly rent and payment over ten years is $800-1000 with ins and taxes and no pmi. The two properties I am offering as collateral I have in one llc and I’m using a new llc for the 4-plex. What am I missing? I know capex and a few repairs I’ll have to do early but is hypothecation normal or done often? I have enough cash flow with multiple paid properties but just want to ensure I’m not really doing something strange.