Q&A: Unsecured Lines of Credit?
Question:
Hi,
I was looking for suggestions/referrals for a good source of an unsecured line of credit.
Thanks in advance,
Kevin
Answer:
Kevin,
The only way that I know of to acquire “an unsecured line of credit” is to get a credit line based on your own good credit.
This is a great idea for all investors. I recommend Wells Fargo for this, because they have a wide variety of investor-friendly products including an unsecured credit line, that you attached to your bank account as an overdraft account. This can provide $20-50K of credit depending on you. As you do more business with the bank, you can get the line extended.
For additional credit, you can apply for a Wells Fargo Visa card, and apply that as additional overdraft credit for an additional $15-40K (or more I suppose).
The other nice products that are available from Wells Fargo are no-cost home equity loans and no-cost home-equity line of credits (HELOCs). The loan is simply a low-interest fixed rate mortgage on the property. In other words, you can buy a property with your credit lines, and then refinance the property at a low-interest rate after the renovation (assuming you plan to keep it for a while). The other option is a HELOC – this is money that you can borrow at any time that is secured by the property. You can even get a loan and then later get a HELOC (on top of the loan) after the home appreciates and there is some equity you can borrow against.
A great was to get rich slow is to acquire rental properties, rent them to pay the mortgage, and then get HELOCs on them as they appreciate. This money you “take out” is tax free and low interet! As you acquire more and more rental properties and as those appreciate more and more, you end up with numerous HELOCs that will give you a lot of credit to invest with, enabling you to do more and more deals leading to more and more rental properties. Obviously, you don’t want to over-leverage, but usually this is not a problem, because lenders will not allow you to borrow all of your equity (as they should not).
This is my basic strategy. If you already have a little money and want to learn more about getting rich this way, give me a call…
Phill
