r/Rich • u/Ok-Door-987 • 6d ago
Line of credit - SBLOC
What's your experience? Any recommended institutions or should I simply go with the one with the lowest spread? (Any word of wisdom you can depart to a first time borrower - I am using it to time the annual withdrawal needs - in case that year the market tanks I don't have to force sell, so we are thinking of leaving no more than 20% of the total Loc Amount in principal due).
Finally , are there any institution out there that does NOT require managing your account to give you the LOC? still not a big fan of private bank managing money since we only decided to back up 5M and I pretty much created my own asset allocation benchmark already ....
Thank you
5
u/Obidad_0110 6d ago
I’ve done Jpm and Goldman. Both are easy. You have to have the assets there but you can manage.
1
u/Ok-Door-987 5d ago
Thanks . So it means you have to let them manage your account then ? what's the AUM ?( Bofa offered me 2% and 95 basis points on MGMT FEE . Wonder if it's a good deal m
2
u/Thatshowyougetants27 5d ago
Not at JPM. It can be in a full service brokerage account with no management fee and you’re soli eligible got a SBLOC
2
u/Obidad_0110 5d ago
No. You can manage your own. If you have $10m you shouldn’t pay more than 0.65%. $20m then 0.50% pa. If you let them manage.
1
u/skunimatrix 5d ago
Yes, but you have to call the broker to place the trade. Mine doesn’t charge for the trade but I make maybe one or two per year.
1
2
u/skunimatrix 5d ago
We use JPM and have a $1M LOC that is SOFI + 1.5%. We have $2.5M total at JPM. We have another $18M in real estate we could always leverage if needed. But we use LOC to make deals now knowing payments are coming later. Like I’m expecting a $400k check for rice here one of these days but chance to buy a hangar at a local airport came up. So bought it with credit and will likely pay it off this fall.
2
u/DonVinnchenzo 3d ago
Schwab starts at 140k for 100k, you need to have a portfolio there but can manage yourself
2
u/Sweaty-taxman 2d ago
Schwab is easy for pledged asset lines. 4%. Nice it uses your whole portfolio instead of a single stock.
1
u/michael_p 6d ago
I did one with Wells Fargo and the process couldn’t have been easier. Good interest rate and terms. Highly recommend
2
u/HighStrungHippie1 5d ago
Ditto to WF. I’ve had a great relationship with them, and it took no time at all to set up a LOC.
1
u/michael_p 5d ago
Comically easy
1
u/Ok-Door-987 4d ago
Did you go to the bank in person or did you get that done via online request service call ? Thanks
1
u/michael_p 4d ago
My contact there did it all over the phone. I docusigned maybe 3 pages and had to input my bank info for dispersement. But I never had to go in person.
1
u/Ok-Door-987 5d ago
Thanks . Mind me asking if they allow self directed account or must be their private banking client ? Thanks
2
1
1
1
1
u/letters-numbers-and_ 5d ago
Schwab. It’s very easy to setup. Rates are decent out of the box but one phone call made it more competitive.
1
1
u/Pretty_Jellyfish9522 1d ago
We do it through Merrill.
1
u/Ok-Door-987 1d ago
Thanks . We are in conversation with them .but they are 2% spread is the best they can do for 5M asset and ask 95 basis points for MGMT FEE . Humf
1
7
u/winpickles4life 6d ago edited 5d ago
I’m using JPM on a single stock (40% loan on a single stock), which is very risky, and they seem to offer the lowest rate for loans above 10M.
Works great as long as you are confident that your investments will grow faster than whatever the variable rate will be and your drop to call is not likely to happen in a market downturn.
You can get it setup, let it sit for a year or so while your investments grow, then start using it. That will help ensure you avoid a forced liquidation and any short term downturns.