I am the Trustee of a three partner family trust. We jointly own two industrial warehouses in Arizona. We are interested in a loan to refurbish one of the buildings and to build out additional office suites in the other. We estimate we need to borrow $375,000. One building has no mortgage. The other has a $300,000 mortgage. The buildings are worth is excess of 3.5 million combined. Is it possible to take out a line of credit as a Trust? We would like to solve our short term needs for cash and then re-finance in a years time. Any suggestions?
Thanks

Robert:

This is more of a legal or loan administration question than it is a “credit” question. Therefore, the following is nothing but an educated guess.

I think that the one important piece of information that you provided is that there is already a mortgage on one of the properties, which seems to be titled under the Trust. This leads me to believe that if a term-loan could be given so could a line of credit. On the other hand, there might be some arcane law in the books in your state that prohibits that type of lending, but I think chances are minimal. It should all be clear once you speak to your lender. The lender will make sure that the deal is possible before working on it.

Remember that while it is theoretically possible, you will be constricted by a loan-to-value limitation as well as the repayment capability of your properties {I am assuming that you have tenants and that rental income will be the source of repayment}.

Good luck