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Great Business Plan Secures $300,000 Credit Line

by Rick and Lia Dawson   

When my wife and I first started our real estate investing career a year and a half ago doing "Lonnie deals," we never thought so much could happen in such a short period. Because of all we have learned here on the website, the Main Forum, and especially the seminars that CRE Online and its affiliates put on, we have shaved years off our learning curve.

We would like to thank everyone here, especially the site's operators, J.P. and Terry Vaughan, for helping us to see real estate investing in a new way; where down payments are not necessary, fortunes do not take 30 years to be made (not that we're there yet!), and properties cash flow nicely from Day 1, where the only sellers are motivated sellers, and profit is made when you buy, not when you sell.

After completing about 15 Lonnie deals, we began rehabbing houses last year. As we completed our first project, we were dismayed to see many great deals pass us by because our cash was tied up.

When we saw an ad for Terry and Ed Garcia's workshop How to Get Lenders Fighting to Lend you Money, we realized that a working credit line would solve this problem for us, and possibly even let us build an inventory of 2 or 3 houses to keep us busy at all times. We would then be able to make all-cash offers and make several purchases at a time if opportunities came in clumps.

I was a bit doubtful that we would actually be able to get a credit line for $100,000 because we are self-employed and have never really had an income history, having only been out of school for two years. And, though we've been careful with our credit for the last 3 to 4 years, there were some skeletons in our closet from 5 to 6 years ago that still haunt us.

But we figured that at least we'd learn how to write a good business plan, package deals for a bank, and hear some new stories about Terry humiliating bankers (that alone would be worth the price of admission).

We enjoyed the seminar and, upon returning home, wrote our business plan. Ed helped us fine-tune the plan by phone and fax, and we began looking for small banks to do business with. We found a bank that had only two branches, and figured this would be a good bank to "practice on." My wife, the more outgoing of the two of us, made a presentation of our business plan to the banker, and was told they would contact us in a few days.

Instead, weeks went by, and no word from the bank. My wife finally decided to go to the branch and close the checking account we had opened there and try somewhere else.

She arrived in paint-splattered work clothes to close the account, when she was greeted by the banker, who was wondering where she had been. They had been trying to contact us to tell us they were willing to do up to $300,000 in loans, at 80% LTV, on single-family houses in our area.

And the rate (not that it mattered much) was only 2 points over prime. All we had to do is have the bank's appraiser value the property, and they would loan us 80% of appraised value. They would also provide the money within 7 days. Since we would never pay more than 80% of appraised value for a fixer, this will result in no money down deals.

Now we can buy like the "players" do--all cash, quick close, and virtually no limit on quantity, with fixers in our area going for $15,000 to $25,000.

 
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