Long Term Financing Structures Discussion
About a year ago I started investing in RE and wonder if a discussion on finance structure and long term strategy would be beneficial.
Background:
My wife owns our residence and pretty much it is off the table for any investing purpose.
3 properties were purchased using a combination of cash and an unsecured line of credit issued to my corporation with a personal guarantee at prime +3, this has the benefit of not being a reported item on my personal credit and offers some flexibility.
Property one was bought rehabbed and sold within 6 months netting a $16K profit which was used to purchase the next one that has a 57K mortgage at 7% fixed 80 LTV.
This property is currently rented by a relative for slightly more than the mortgage payment.
Third property is a 2/2 duplex that was purchased for $20K and put $10K put into it value around $45 to $50K we are getting $400 each side though there are some additional expenses because we pay for an alarm system service monthly.
It is not what we would consider the best part of town but generates a decent cash flow.
My personal credit is excellent and I have about $170,000 available in unsecured LOCs and or credit cards; many of these offer zero or low rate balance transfers from time to time.
Objectively what I would like to accomplish is.
Obtain a mortgage on property two, either cash out property one or at least make it more flexible.
Set the stage for the next property acquisition for long term holdings and appreciation and step up the acquisition rate.
Use the low rate offers to augment the properties mortgage rates.
One way I see this is to convert property two’s mortgage to a Heloc and obtain a Heloc on property three.
Then using the low rate balance transfers pay down the Helocs and transfer back before the offer expires.
This opens the corporate LOC back up to its full amount of $50K offsets some of the borrowing costs.
Concerns are having Helocs reporting as revolving debt with a high amount owed versus the credit line can adversely effect a Fico score thereby increasing future borrowing costs and slowing acquisitions.
Is SFR really the right move here, should I be looking to leverage my corporate credit more and consider an apartment building?
[ Edited by Ohioinvestor on Date 05/28/2005 ]
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