LOC possible on stock and mutual funds account?

[bigbadbrad]

Is it possible to get a LOC using stock or mutual fund accounts? Lender wants us to put up 1.5 mill. of our money to build 18 rental townhomes. Don't want to liquidate the accounts because of capital gains tax.

 

[Thomas Beyer]

It's called margin and as such you can withdraw cash with most online trading accounts.

So if account is worth $3M you can withdraw 50% or $1.5M for sure or up to 70% ( or over $2M) with some stocks and mutual funds eligible for lower 30% margins.

Check your margin requirements and eligibility. Interest rates are usually prime plus 1% and sometimes lower with accounts over $1M.

If stocks and mutual funds are held with a traditional ( aka expensive ) broker move all stocks and MFs in kind to a new online account with margins.

 

[bigbadbrad]

Thanks Thomas. Commercial lender said no problem then came back with "sorry head office doesn't offer this product anymore." My partner has been dealing with the same 2 brokers for over 20 years and won't switch. I'll hang onto the land as we cash flow with the existing homes and wait another 5 or 10 years. If the city keeps on densifying should be able to do a 4 story wood frame with u/g parking instead of the TH.

 

[Thomas Beyer]

Huh ?

Unclear how the land fits into this question about margin.

Move 90% of the $s to an online account and mirror broker recommendations if you like him so much. Far lower fees.

Chose between ability to collaterize stock portfolio or broker from the Stone Age.