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By Iman Yusef-Yahya

Submitted 0252PM on Saturday 22 November 2008


The author has permitted the reprinting and redistribution of this article.


Building a Line of Credit

Growing your real estate business is an exercise in thinking of new creative ways to raise capital so that little or no money comes out of your pocket. The less you pay of your own money, the greater leverage you have and the greater chances of creating sizeable profits on each deal.


One powerful method for raising capital is establishing a revolving line of credit with one or more financial institutions. You might want to begin with your local bank where you already do business.


Let’s say you have a savings account which has $5,000 or more in cash in the account. Apply for a loan against this amount (the savings being the collateral) and take that $5,000 to another bank and deposit it, and apply for a loan against that $5,000. After a few weeks, pay back the first loan with the $5,000 from the second loan. Once you begin doing this a few times and your repayment history is built up, you can apply for a revolving line of credit to help fund your deals. (There are investors who have worked this plan with as little as $500.)


The key here of course is to create a strong reputation of taking out small loans and paying them back quickly. From there, you increase the size of the loans. This kind of integrity goes a long way with officers of financial institutions. They will be eager to do business with you.


The benefits of a line of credit is that once it is set up and established, it is ready and waiting for you to use. There will be no waiting and no forms to fill out. You can negotiate your real estate deals with much more flexibility and confidence, knowing you have the cash to close quickly.


Home Equity Line of Credit

If you own your own home and have equity built up in it, you have the cash to grow your real estate investing business.


A home equity line of credit (or HELOC) is similar to using a credit card in that it has a credit limit. This limit is determined by your credit worthiness and the amount of the equity in the property. It is a simple process, once the line of credit is set up, to transfer funds from your HELOC, or even write checks directly from the account. The good thing about a HELOC is that the interest rates are usually lower than cash-out refinance mortgages, and there are tax advantages as well.


The only interest you are paying is on the money you have used, not the entire amount of the loan. Likewise for payments – you are paying only on what you have used. At a future date, you may be able to renegotiate for a higher credit line when the equity in your home increases, especially if you have made above-minimum payments on timely basis, or made home improvements.


Home Equity Loan

With regard to the equity in your home, there is yet another option that is similar to the HELOC, and that is a home equity loan. This type of loan uses the equity in your home as collateral, and is completely separate from your mortgage.


With a home equity loan, you may be able to borrow 90% or more of your home’s value. One of the great advantages of a home equity loan is that you have the option to pay the loan off early without penalty.


Negotiating Power

No matter which way you go regarding using a revolving line of credit, or using the equity in your home, with this available money at your disposal, you are well equipped to negotiate the best deals for bargain properties. When you find that willing seller, you will be able to put cash on the table and close quickly. And you will, almost always, be able to get the best price.


Using a marketing system that allows her to find some of the very best ‘below market’ deals around the country, Iman Yusef-Yahya’s system has enabled her to assist other real estate investors looking for simple, high profitable deals. Get instant access to these profitable deals at


If you would like to take advantage of the market and learn how to invest in real estate and you are local to the Dallas Fort Worth area, I know a really great teacher and mentor here in Arlington Texas. Please take a look at his web site:, Dennis has a great Mentoring and training program, I know because I am one of his former students. I learned a lot from his one on one teaching technique. – Michael Harman 817-457-7572>

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