Line of credit, Refi or liquidate to get deal done

3 Replies

So I own a few 3 flats one which is mine free and clear of any loans, conservatively it's valued at 335.
I stumbled on an owner of a 18 unit that wants to sell. I looked at the property ran the numbers and I want it!
The problem is I don't have any cash so I went to the bank to inquire about a line of credit to purchase this 18 unit, it's a local bank that I've never worked with but did open a few accounts a year ago anticipating of me buying something (DA).
So the bank comes back and only offers to give 55% of what I have invested in the property, is this normal practice?
I'm a little disappointed because for one it would make the 18 unit deal more challenging to pull off and the property is worth over three times that much!

Any thoughts

@Frank Gigliotti

Not clear what the 55% applies to. Is that the LTV for a cash out refi of your free & clear property or is that the line of credit? You should be able to do a cash-out refi for up to 75% of the appraised value (if not 80% since you are living in it). Line of credit offerings will vary by bank. Keep shopping.

Selling will clearly give you the most cash - will it be enough?  For an apartment you may be able get 75-80% financing depending on the lender and the property condition and your strategy. Or you may even be able to get some owner financing - have you asked?

Doug McLeod

    The 55% is the line are they are basing that on what it cost me. This was a total gut 3 unit.

    The 55% is the line are they are basing that on what it cost me. This was a total gut 3 unit.

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