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QUESTION DETAIL
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My business plan is rehabilitation and sales of REO property. Originally, I planned on starting with $250,000, and working one project at a time, all cash purchasing. I realized that keeping original startup capital as leverage/collateral and financing each property with bank loans would extend my capability for inventory acquisition, making it possible to work several properties simultaneously. How would a bank see this proposal: blanket loan of $200,000 backed with $225,000 cash and collateral of 3 or 4 properties? What would the terms of such a loan be?
ANSWER
The BIDaWIZ Team's Answer:
It's actually very difficult to provide guidance on the terms of a loan for a very hypothetical situation. As you know, there are many factors that banks consider when issuing a loan, and each bank has a different process. We would recommend that you start small and focus on only one property. The more complicated and more properties that are involved, the harder it will be to get bank financing without having a track record.
