How does a line of credit work when purchasing investment property?

Asked by Drains, Orange, TX Sat Jun 15, 2013

Example: if I have a $100,000 line of credit and find a property for $70,000 do I pay cash or just put a down payment down?

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Michael Cheng, Agent, San Jose, CA
Sat Jun 15, 2013
If you have a line of credit, you can do whatever your lender's covenants allow. If they allow you to purchase investment properties, then you can pay all cash. If you're looking to leverage further, then you can try putting down only a downpayment.
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It seems the line of credit would be better to leverage more properties using it for the down payments and using the line of credit and paying cash would be better for flipping the property. Am I thinking right? I have several rental properties that are doing well, I used my money to put the down payments on these properties.
Flag Sat Jun 15, 2013
Thanks Michael
Flag Sat Jun 15, 2013
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