I'm Cash Poor! Use C.C. Checks Or Line Of Credit?
A few months back I got a HELOC (now 90% used, paying interest only payments) that I used to buy some properties. I've also incurred maybe $10k of CC debt for various rehabbing. I suspect but don't know that this has hurt my pre-HELOC FICO scores of 770-796. I have little W2 income, been living on savings and now my RE income.
I love using leverage, but now I'm cash poor, with several good deals pending. Would I be better off to use unsecured credit card checks (3.9-4.9% life-of-balance rate; maybe $20,000 available) or try to get a new Line of Credit on property I own outright that I bought with the HELOC money? Maybe I should I cool my jets awhile instead of over-leveraging? So far I'm comfortable with my debt situation. What's your experience? Thanks & Happy New Year!
IMHO, each property should have its own mortgage, preferably nonrecourse if you can get that deal. They shouldn't all be riding your HELOC. If you'd like to be able to sell 'em with the mortgages still in place, you might look into dropping each one into its own corporate entity prior to mortgaging.
Thanks, that makes sense. Trouble is, I got the HELOC with the help of my fiance's credit, but I don't have the RE track record yet (and very little W2 income) to get mortgages via demonstrable/Schedule E cash flow (this is my first year of REI). Debt to income is pretty high since my income is so low. Any other ideas/insights...?