We like to get as many equity lines as possible. By equity lines, I mean that I want loans that I can pay down and borrow against every day if I want. The reason that I want to do this is that if I have a lot of equity lines, I can take my profits and pay down equity lines. When buying and selling more than 5 houses a month, we have large amounts of cash going into and out of checking accounts. Unfortunately, without equity lines, I would typically have to pay 7.5% interest on a loan, while at the same time, keeping large amounts of cash in checking. As a result, I have to pay 7.5% interest on loans, and only earn 1.5% interest in checking.

Instead of using the traditional financing methods, I like to have as many equity lines as possible. This way, when money comes in, I pay down the equity line and when money goes out, I use the equity line to write the check. This keeps me from having to pay 7.5% interest on a loan and earning only 1.5% interest from checking. If we have the scenario on 4 to 5 properties, the interest savings can be hundreds or thousands of dollars per month. E.G. If you sell a $300,000 house and put that money into checking for 30 days, under normal lending situations, you would earn $375 at 1.5% interest. But if you had an equity line on another $300,000 house, you could temporarily pay down that house to zero balance for the month. Thus, you might save about 7.5% interest. Thus, your interest savings for the month would be $1,875 and your net savings was a full $1,500 for that month alone. When you need the cash again, you can simply use your equity line and access that $300,000. This savings would only be possible with the use of an equity line.

If you are looking for a way to find equity lines, one method is to establish an equity line against your pre-existing stock or mutual fund account. Pledge your stocks as collateral with your local bank. They will probably give your 50-75% of the value of the stocks at prime or less. Check with your accountant first to make sure you are structured to write off this interest.

Brad Zitzner is a real estate investor, coach, and realtor. Brad has bought or sold over 150 properties. His web based Property Management System “ZZZ Real Estate” helps real estate investors remove the chaos and paperwork from their real estate business. To get Brad’s FREE real Estate ebook go to www.zzzinvestors.com