Brought to you by Steve Roth
Line ?f ?credit?building is a great real estate funding option because of its low interest rates and flexibility.
Growing ??ur real estate business ?? ?n exercise ?n thinking ?f n?w creative ways t? raise capital ?? th?t l?ttl? ?r n? money ??m?? ?ut ?f ??ur pocket. Th? l??? ??u pay ?f ??ur ?wn money, th? greater leverage ??u h?v? ?nd th? greater chances ?f creating sizeable profits ?n ???h deal.
On? powerful method f?r raising capital ?? establishing ? revolving line ?f credit w?th ?n? ?r m?r? financial institutions. Y?u m?ght w?nt t? b?g?n w?th ??ur local bank wh?r? ??u ?lr??d? d? business.
Let?s ??? ??u h?v? ? savings account wh??h h?? $5,000 ?r m?r? ?n cash ?n th? account. Apply f?r ? loan ?g??n?t th?? amount (the savings b??ng th? collateral) ?nd t?k? th?t $5,000 t? ?n?th?r bank ?nd deposit it, ?nd apply f?r ? loan ?g??n?t th?t $5,000. Aft?r ? f?w weeks, pay b??k th? f?r?t loan w?th th? $5,000 fr?m th? ????nd loan. On?? ??u b?g?n d??ng th?? ? f?w times ?nd ??ur repayment history ?? built up, ??u ??n apply f?r ? revolving line ?f credit t? h?l? fund ??ur deals. (There ?r? investors wh? h?v? worked th?? plan w?th ?? l?ttl? ?? $500.)
Th? key h?r? ?f ??ur?? ?? t? create ? strong reputation ?f t?k?ng ?ut small loans ?nd paying th?m b??k quickly. Fr?m there, ??u increase th? size ?f th? loans. Th?? kind ?f integrity g??? ? long w?? w?th officers ?f financial institutions. Th?? w?ll b? eager t? d? business w?th you.
Th? benefits ?f ? line ?f credit ?? th?t ?n?? ?t ?? set u? ?nd established, ?t ?? ready ?nd waiting f?r ??u t? use. Th?r? w?ll b? n? waiting ?nd n? forms t? fill out. Y?u ??n negotiate ??ur real estate deals w?th mu?h m?r? flexibility ?nd confidence, knowing ??u h?v? th? cash t? close quickly.
Home Equity Line ?f Credit.
If ??u ?wn ??ur ?wn home ?nd h?v? equity built u? ?n it, ??u h?v? th? cash t? grow ??ur real estate investing business.
A home equity line ?f credit (or HELOC) ?? similar t? u??ng ? credit card ?n th?t ?t h?? ? credit limit. Th?? limit ?? determined b? ??ur credit worthiness ?nd th? amount ?f th? equity ?n th? property. It ?? ? simple process, ?n?? th? line ?f credit ?? set up, t? transfer funds fr?m ??ur HELOC, ?r ?v?n write checks d?r??tl? fr?m th? account. Th? good th?ng ?b?ut ? HELOC ?? th?t th? interest rates ?r? u?u?ll? l?w?r th?n cash-out refinance mortgages, ?nd th?r? ?r? tax advantages ?? well.
Th? ?nl? interest ??u ?r? paying ?? ?n th? money ??u h?v? used, n?t th? entire amount ?f th? loan. L?k?w??? f?r payments ? ??u ?r? paying ?nl? ?n wh?t ??u h?v? used. At ? future date, ??u m?? b? ?bl? t? renegotiate f?r ? higher credit line wh?n th? equity ?n ??ur home increases, ???????ll? ?f ??u h?v? m?d? above-minimum payments ?n timely basis, ?r m?d? home improvements.
Home Equity Loan
W?th regard t? th? equity ?n ??ur home, th?r? ?? ??t ?n?th?r option th?t ?? similar t? th? HELOC, ?nd th?t ?? ? home equity loan. Th?? type ?f loan u??? th? equity ?n ??ur home ?? collateral, ?nd ?? completely separate fr?m ??ur mortgage.
W?th ? home equity loan, ??u m?? b? ?bl? t? borrow 90% ?r m?r? ?f ??ur home?s value. On? ?f th? great advantages ?f ? home equity loan ?? th?t ??u h?v? th? option t? pay th? loan ?ff early w?th?ut penalty.
Negotiating Power
N? matter wh??h w?? ??u g? r?g?rd?ng u??ng ? revolving line ?f credit, ?r u??ng th? equity ?n ??ur home, w?th th?? ?v??l?bl? money ?t ??ur disposal, ??u ?r? w?ll equipped t? negotiate th? b??t deals f?r bargain properties. Wh?n ??u find th?t w?ll?ng seller, ??u w?ll b? ?bl? t? put cash ?n th? table ?nd close quickly. And ??u will, ?lm??t always, b? ?bl? t? g?t th? b??t price.
Steve Roth is the president of Chicago Business Capital. Go to http://chicagobusinesscapital.com for more tips and advice on establishing a line of credit as well as other personal and business funding options.
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Filed in: Real Estate Funding
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