I'm posting this because some of you may find this info "handy" either now or in the future.
So I'll spare you the details except to say that I recently moved some of the bonds I have with another brokerage into one of my Schwab accounts. I set up a PAL (Pledged Asset Line) with them (Schwab) so that I can fund the purchase of the land and build a new house in Sun Valley.... without borrowing or getting a construction loan etc. It's an open line of credit with a check book but I'm using securities (stocks and bonds) for the line to borrow against. This is REALLY REALLY cheap money and I don't have to pay it back for like 5 years - and can pay interest only against the money drawn against the line. It's 2.28% money.... and I can borrow 70% of the asset base. It allows me to trade - or change positions - still withdraw the dividends etc. It's basically an invisible line drawn around a portion of this account which must maintain a certain value.
For guys like me -- this was super simple to set up -- one phone call... discuss the options... BAM! Done.
Normally I'm debt adverse... but for this instance - this is going to work out really well. I only need to draw against it as needed and this little house project will play out over a 2+ year timeframe. I don't have to deal with any bankers (I hate them)... I don't have to sell any houses or assets - so there's no pressure to raise cash at a certain time etc. I'm really just borrowing my own money -- all the while it's still earning money.
Ordinarily these "PAL" accounts carry a 3 month LIBOR (London Inner Bank Overnight Rate) PLUS 3%..... With my asset base which is FAR higher than the assets put into the PAL -- I squawked like a hungry crow and they finally agreed to 2% over LIBOR. The 3 month LIBOR is about .28 right now.
When the construction is nearly completed -- we'll put the Bellevue place up for sale and move to our condo in SV -- then we can be there for the finish work on the house and all the little details that go into that.... once we move -- we already have a buyer for the condo (friends that want it). Then we'll get permanent financing on the new dump.
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