Unique Financing Request
I’m looking for some unconventional financing. I am heavily in the rental business as well as the flip business and am looking for some unique financing for situations that I frequently run into.
I currently have 10 rehabs that I am currently working on that are free and clear. When selling these properties I find a lot of people looking to do lease options or would like to owner finance. I try and prefer to sell outright in order to get my cash back to put back into another project, but I would like the opportunity to keep a property every once in a while without leaving my money into the deal.
I’m looking for a company that will give me a loan or line of credit on a property after the rehab is completed. I do not want to do a conventional refinance and pay 4K in fees, but would rather have a company give me a Line of credit or loan with a lien on the property for a certain LTV (ex. 60% LTV). This will allow me to get my cash back and at the same time keep the property to add to my portfolio. This would be compared to a Home equity line of credit (but on 10 to 20 houses over a year span). I do not want to pull my personal credit for each property we do this financing with (pulling it once at first is ok) and I do not want this loan to show on my personal credit (showing on my business credit is ok).
Does anyone know of a financial institution or broker that might have something that fits this situation based on the following criteria:
1) Can give me a loan/LOC on a free and clear property at a 60% LTV or greater
2) Use the property as collateral and not put debt on personal credit (Home will be in name of an LLC)
3) Only pull my credit once and not for every house we do this financing with in the future
4) The ability to do this for 10 to 20 houses over a year span (typical commercial blanket loan will not work because we are financing one property at a time and not all of them at once)
The bank would have a minimum risk by having a 1st lien with a only a 60% LTV.
Thanks for your help!!!
Aron Anderson
Its not all that unique.
What you want is called a Rotating Line of Credit. Its usually an "inventory" loan to a distributor or retailer. The only difference is that your "inventory" is real estate but that is a good thing. Much easier to find 10 houses if your borrower flakes out on you than a bunch of refrigerators or whatever.
You might try a lender who would write it up as an SBA CAPline loan. Chet Mazur brought it to my attention. Its not quite a perfect fit to their program guidelines and I am not sure how creative ANY SBA office is let alone yours.
Other than that look for local commercial banks that cater to factoring or revolving credit lines for manufacturers.
ITBInvestor,
Great question. Thanks for the response. Some hard-money, some commercial loans with local lenders. All with balloons. Unable to refinance due to the evaporation of Alt-A (SIVA, way more than 10 properties, etc). The loan amounts and cash flow strongly support a reasonable interest rate. Well seasoned.
JohnCl
[ Edited by JohnCl on Date 01/23/2009 ]