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Why a Real Estate Line of Credit is a Smart Choice for Investors

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Why a Real Estate Line of Credit is a Smart Choice for Investors

By Marco Carbajo, Guest Blogger
Published: August 14, 2014

As a real estate investor, putting together a variety of financing tools at your disposal is a key component for executing your deals. Some methods include, but are not limited to, conventional mortgages, portfolio lenders, owner financing, hard money, private money, home equity loans, commercial loans, etc.

One popular type of real estate financing method is using a real estate line of credit. Whether you invest in single family homes, commercial real estate, apartments, etc., this access to free spendable cash can be extremely useful.

When it comes to obtaining a real estate line of credit, many investors rely on borrowing against the equity in their property in order to get access to cash. When a credit line is secured, the creditor has a lien on one of your assets – your property.

Although this real-estate-secured line of credit allows you to take advantage of the equity in your home or investment property, there is an alternative option that offers many more advantages ­– the unsecured real estate line of credit.

These unsecured credit lines require no collateral, no financials, no appraisals, no tax returns, and no restrictions on use of funds. Qualification is strictly based on the strength of one’s personal credit reports and scores. These credit lines can be used to purchase, rehab and flip real estate, allowing a real estate investor to execute more deals and ultimately increase their bottom line on each and every property.

With an unsecured real estate line of credit, you can draw on and make payments on these credit lines as many times as needed, which means you can flip multiple properties with the same line of credit. This saves you from the transactional cost of working with hard money lenders that make you pay “upfront points.”

For real estate investors, it’s all about having access to cash in order to execute deals. The fact is that there are tremendous investment opportunities available in the marketplace right now. With real estate credit lines, investors can get the flexibility they need so they can better optimize their real estate investment strategy.

Other benefits of unsecured real estate credit lines include:

  • No upfront fees
  • No reporting to personal credit reports (only reports to business)
  • No documentation
  • No appraisal
  • No collateral
  • No restrictions on use

As every deal is different from one another, real estate investors will find that using various types of financing tools such as unsecured real estate credit lines can provide a great way to finance an investment property.

Having access to freely spendable cash without restrictions is what every real estate investor needs in their arsenal whether it’s for purchasing investment properties, rehabbing properties, paying off balloon notes, or purchasing raw land; it’s clearly a smart choice.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the Community, and All His articles and blog; Business Credit, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.


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Hi I have two rental properties in VA. And I like to secure a line of credit using either or both. I stopped by some banks today and was told that if they are rented, they cannot offer any LOC...! Anyone knows of banks in the Houston area that offer LOC on rental properties ? Thanks
My LLC owns two houses outright, each worth about $100K. We want to borrow against one or both of those houses so they can be rehabbed and rented again. But no one will loan to us because the owners have bad personal credit scores...having beggared ourselves keeping the LLC alive. Would GREATLY appreciate leads to an organization who will help us out of this hole. We wouldn't mind at all requiring the proceeds of the loan to be used strictly within the LLC that owns the houses, rather than used to pay any personal debts of the owners. That is our intention anyway.
Some thing very tricky is written in "Why a Real Estate Line of Credit is a Smart Choice for Investors", which is 'Smart Choice' it is the simple answer for everybody that Good investors always use the best option.
I appreciate any and all assistance from and new investor(s) to join in with us to grow together as a business associates financial team with various financial tools
Hello Marco, how do I get these kind of cash to execute deals do I have to have a real estate credit line to get these kind of cash if not can you help out where to find these places. thanks God bless you
more to help clarify this issue: A line of credit (HELOC for short) is an "open" line of credit allows you to borrow several times on their home equity. You remove the line over time, usually up to a certain credit limit, using special checks or a credit card. As you pay the capital can take back that amount. This part of the plan known as "withdrawal period" which usually lasts for a fixed term, such as ten years. After the draw period ends, usually then follows the "pay period", during which you have to pay the outstanding regular periodic payments of principal and interest balance. The payback period is also a fixed term of years.
I would like to buy a house. I have raw land. Is there anyway I can use that as equity or colateral.
As a cost accountant and CEO of a certified government corporation I appreciate any and all assistance from and new investor(s) to join in with us to grow together as a business associates financial team with various financial tools we knowledgable about in our tool chest for leverage and success.


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