How many of you have used large credit lines for down payment?

Just curious if it actually works. There are a lot of companies out there offering credit lines, most are bogus or worse...scams. But does anyone use a legitimate line to buy properties? If so how does it work. Are there seasoning issues with the bank or debt issues etc.? A little insight would be greatly appreciated.
In General Area - Asked by Nick N. - Jan 7, 2009
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Jim C.
Owner/Investor
Appleton, WI

If you work with a local lender a lot of times they won't care where you get the money for down payment, although that may be changing in some banks. Just find a different one then, but the basic idea is open a secured line of credit, or lien on another property to get the funds for down payment, then buy the property (make sure it cashflows positive including your borrowed funds for down payment), then you can refinance shortly afterward to pay off your line of credit. The key is to ensure you are buying right (enough of a discount) so that the property will appraise later when you go to refinance. Sometimes you may have to prove that you have improved the property in order to justify a higher appraised value, but the income approach to value is dominant in multifamilies and alot of commercial properties. Hope this helps. Jim C.

Jan 7, 2009
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Joe V.
Owner/Investor
Plymouth, MI

Yes...all the time. I found it is the only way to do it. There are a number of companies that say they can get you an LOC, but they are just selling you a way to go to the bank to ask for it. The LOC's you get are not very high and it takes to long to get there. Also, you usually need to personally sign for it. Not a good move if you don't need to...and you don't.
You need to use a company that offers a money back guarantee on getting the LOC, and that is NON-Signatory as well. They do exist...I can vouch for that. The idea is to use the LOC, not as a down payment, but as a way of getting 100% financing. This way you would be using your LOC funds on more than one property...instead of just using on one as a down payment. It becomes the gift that keeps on giving. It's the only way to do it. It works all the time.

Jan 8, 2009
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Nick N.
Owner/Investor
Cincinnati, OH

Thank you Jim and Joe.

Jan 8, 2009
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Ty C.
Owner/Investor
Hamilton, MT

Joe V. if you read this is there a company that you would recomend for this service. I have looked and found many I just would like to find someone that has had a positive experience.

Feb 14, 2009
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