Tag Archive for: business credit card

Business Credit: 5 Simple Steps To Get Started

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Business Credit: 5 Simple Steps To Get Started

It is imperative that investors take the time to set up their business correctly from day one. In doing so, they can easily get onto the fast track to success. Alex Erlich, a credit advisor and educator, is joining us today to discuss the steps investors need to take to win the investment game. Let’s take a closer look to discover the five simple steps to get started.

Getting started is daunting! Here is what you need to get in it to win it.

First, Personal Credit

Make sure that your personal credit is setting you up for success. The majority of investors use their personal credit for business expenses. As a result, the utilization rate begins to have a negative impact on personal credit scores. By identifying and separating personal expenses from business expenses, you can in turn get your credit score back on track. 

Second, Identify Your Business

It is important that you not only identify the type of business you are starting, but the corresponding subcategorization as well. Banks will look at the NAICS, also known as the North American Industry Classification System, when you apply for business financing. 

Third, Select a Business Name

How do you select a name for your  business? Will there be a parent company? It is imperative that you select a business name that represents your company, and that your name is available within your state.

Fourth, Set Things Up Correctly 

Establishing the company properly through the secretary of state, applying for an EIN, applying for a business license, and opening business accounts for expenses. Setting this up correctly ensures that both lenders, as well as clients, see it as a business.

Fifth, Set Clear Goals

Be very clear with your goals from day one! Where do you want to go with your business, how many properties do you need, do you need to buy machinery? 

In Conclusion

Starting a business is overwhelming. Taking it step by step will result in not only helping your business succeed, but it will also have a positive impact on your personal life as well. We have created a guide that will help you step by step through the process of starting your business. This includes links to all of the important websites that you need for your specific state. We are here to help get you on the fast track to success.

Contact us today to find out more about setting yourself up for success.

Need more tips and tricks? Watch the full interview with Alex Erlich

 

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2024 Real Estate Investing – Why You Will Need More Liquidity

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2024 Real Estate Investing – Why You Will Need More Liquidity

Investing in 2024 will require more liquidity than ever! What do I mean by liquidity? Liquidity is the money that is available to you to help fund deals. These funds are not from lenders, but are instead from you. This includes funds that you bring into your investments, the amount that you put down on a property, and the money that you have to carry on a project. Those expenses will be more important in 2024 than they have been within the last decade. What does liquidity mean in your world and how do you find it? Let’s take a look at the four “liquidity bucket” options that you can fill up now in preparation for the new year!

Liquidity Buckets for Success

1. Lock in HELOCS

Banks and credit unions are driving down their loan to value percentages. What started at 90% LTV a year ago, has now plummeted to 75% LTV, and in some cases even 70% LTV. Loan to values are shrinking fast, so lock it in now before it drops even further! Make sure that you get HELOCS wherever you can! This can be on your primary, as well as on all of your investment properties. Remember, you don’t have to use the funds from the HELOCS, the money is just reserved for a rainy day. While it may cost a few hundred to close later on, it is a great resource to have when buying properties, making payments, doing construction, or any additional expenses that come your way. 

2. Unsecured Lines of Credit

You can normally find unsecured lines of credit at larger banks such as Chase, Wells Fargo, and American Express. They have lines of credit that you can sign up for as long as you have good credit. Surprisingly, investors can receive $5K, $10K, $15K, and even $100K in unsecured lines of credit. Once again, it won’t cost you anything. By setting them up and having them on hand, the funds from the unsecured lines of credit will be available when you need them.

3. Business Credit Cards

As an investor you should already have business credit cards established. It is imperative that investors move all business expenses off of their personal credit cards and onto their business credit cards as soon as possible. This improves personal credit scores, provides opportunities for higher credit limits, and can act like a  line of credit up to your available limit. Business credit cards provide the flexibility that you need to secure your future success.

4. Peer to peer lending 

This form of lending is also known as other people’s money. These funds can come from neighbors, friends, and even groups that you are a part of. It is important to communicate with people in real estate groups, those in the community, and other groups that you are involved in. In talking about your real estate adventures and what you are doing, it will create opportunities to find others who are looking for better returns on their investments as well. There is a potential for a win-win solution for everyone involved. Peer to peer lending is the biggest untapped portion of funding available. Reach out to us for more information on how to get started.

Fill your Liquidity Buckets Today

The goal is to fill your liquidity buckets now! As investors, we are all going to need these extra funds for down payments, escrow, paying contractors, as well as any other expenses that come our way. Investors who take the time at the end of this year to prepare, will have more opportunities and a huge advantage in 2024 over those who don’t act now.  Lenders are going to require you to be more liquid, have more reserves, and put more money down. So, by having more liquidity, you will be able to easily open the doors to success.

In preparing now and filling your liquidity buckets to the brim, you will set yourself up for success come the new year! 

Watch our most recent video to find out more about why you need liquidity. 

If you have any questions on liquidity, finding HELOCs, or have any other questions, please reach out to us!

We would be happy to help guide you to become more successful in 2024. 

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The FASTEST Way to Pay Down Debt: Credit Score 911

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If you’re stuck with a bad credit score, a 911 loan could be the perfect way to pay down debt.

One of the most common issues of investors we talk to is low credit score.

In the real estate world, when the Fed tightens everything up (as they have done recently), credit scores become more and more important. This means that the threshold of what qualifies as a “good” credit score goes up, and it’s almost impossible to get a loan if you don’t meet that threshold.

How can you fix that quickly so it doesn’t tank your investments?

The Changing Economic Landscape

Everyone used to have options. If your credit score was a little low, it was alright; you could still find someone willing to lend to you without too much penalty.

In recent years, things have shifted.

As the Fed tightens up, there’s less money going around, meaning banks don’t have as much money to lend as they used to. 

How do they solve this problem? 

They raise the requirements for getting a loan.

Now, instead of being minorly penalized for a low credit score, some people are finding it difficult to find loans at all. And some of the loans they do find are smaller and have significantly higher rates.

Some banks may not even look at your loan application if you don’t meet their credit score requirement.

Understanding Your Credit Score

The 2 largest factors that make up your credit score are payments and usage.

  • Payments look at whether or not you’re paying on time. 
  • Usage looks at how much of your total possible balance you’re using each month.

For example, if your usage limit is $10,000, and you’re frequently using $7,000 of that, you have 70% usage.

Ideally, FICO wants to see you using about 20%-30% of your available credit. Any higher than that, and you become riskier for the banks.

Especially when you’re beginning as a real estate investor, it can be so easy to rack up the usage: getting supplies at Home Depot, paying contractors, etc.

It’s all-too-common to see people have $50,000 or $100,000 on maxed out credit cards.

This is where a credit 911 loan comes into play to pay down debt.

What is a Credit Score 911 Usage Loan?

A Credit Score 911 Usage Loan is essentially a non-reporting loan that pays off all credit cards, allowing your credit score to shoot upwards.

These loans act as a fast-acting antidote to your credit score usage problems. The next time your credit report is generated, you should see significant improvement.

Essentially, it’s a quick fix for people who pay their bills on time.

Who Should Use a 911 Loan?

If your credit score is weighed down by a long history of late payments, this loan is not going to help you very effectively. 

These loans are perfect for people whose credit has been plagued by high usage, who need to fix their credit score FAST.

In short, here’s what you should know about a 911 Usage Loan:

  1. It’s used to pay down debt that’s accumulated through usage issues, not late payments.
  2. We’re an asset-based lender, so make sure you have some real estate to secure your loan.
  3. You need an exit strategy. We want to make sure you have a way of paying that loan back.

Real estate investing is a fast-moving business, and it’s important to have a quick solution for an issue that could otherwise cost you thousands of dollars in higher payments or declined deals. 

How Long Before it Pays Down my Debt?

We call this a “Credit Score 911” because we understand that a low credit score can be an emergency need.

It can take as little as 2 weeks (or up to 30 days) to get this loan and see results in your credit score. The timing depends simply on when your credit cards report and when your statements come out.

You still owe the money, but now you owe it to a non-reporting entity.

Although it can be daunting to take out an unexpected usage loan, a delay of a month is far better than a long term delay where you can’t refinance or buy.

How Can I Set Myself Up to Avoid Needing a 911 Loan?

The root of this problem is almost always using personal credit cards for business-level needs. 

Getting the right business credit card in the name of your investing company has a number of benefits:

  • It won’t report to your personal credit if you pay on time.
  • They don’t penalize high usage.
  • Some business cards even reward running up a larger balance.
  • Even if your business is brand new, if you apply for a business credit card with a high personal credit score, you’ll likely be approved.

We’ve partnered with Nav to help you find a business credit card that works well with real estate investing. 

As with a personal card, you can find cards that offer perks and rewards that appeal to you. Just make sure you look for ones that 1) don’t report to your personal credit and 2) like high usage.

Our goal is to help you fix your credit score and get your business in order so that you never need a 911 loan again!

Next Steps

If you’re wondering if a Credit Score 911 loan is right for you, what steps should you take?

  1. Look at sites like Credit Karma or TransUnion. See where your score is at, and run simulators to see what would happen if you paid off certain credit cards.
  2. Consider the qualifications for a 911 loan. Are you paying on time? Do you need to fix the problem quickly?
  3. Draft a plan to pay off a credit score loan. Especially if timing is important, having your exit strategy ready helps us get that money to you more quickly.

Remember, you still need to pay everything on time. We’re just here to help people who have fallen into the trap of using personal credit cards for business purposes in this competitive environment.

If you’re ready to take the next steps or have questions, reach out to us at Info@TheCashFlowCompany.com. 

We’re always happy to talk you through a 911 loan, how it can pay down debt, and how you can set up your business to avoid this problem in the future.

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Credit Scores Explained

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Credit scores and loans

Understanding credit scores is critical in your journey as a real estate investor.

Lower credit scores mean you might not get a loan you’re applying for. Or you might have to put more money into a deal. If you have a bad credit score, you’ll typically see higher rates or terms which make dealing with the market frustrating. 

If you’re a real estate investor or even business owner, it’s okay to use your personal credit for your business. But it’s absolutely critical for you to understand how credit scores work.

Using personal credit works, but you want to be careful not to run it up to where you’re handicapped with higher rates. Higher rates quickly turn into higher down payments and costs overall. 

You want to build your credit score so it works for you instead of against you.

How Credit Scores Work

Credit card usage is the leading reason we see for low credit scores.

Surprisingly, the amount owed doesn’t affect the score nearly as much as the ratio of usage compared to the available balance.

For example, if two people owe $1,000 on their credit cards, you might expect similar credit scores since they owe the same amount. But that isn’t how it works!

Their FICO credit score will reflect the difference in their credit limits. 

Here’s how it works:

Let’s say Person A has a credit limit of $2,000, resulting in a 50% credit usage ($1,000 owed divided by $2,000 credit limit). In contrast, Person B owes $1,000 but has a credit limit of $5,000. Person B then has only a 20% credit usage ($1,000 owed divided by $5,000 credit limit). 

FICO and other credit-rating agencies consider credit usage ratios when determining credit scores. They want you to use your credit cards, but not too much. Therefore, FICO will typically raise your score when you have usage between 20%-30%. 

This can get complicated, and we recommend moving everything to a business credit card. Keeping your personal credit score separate from your official investing credit can save significant stress if your personal score dips.

If you do choose to continue using your personal credit for your business, it’s important to make sure you understand how usage affects your score.

Read the full article here.

Watch the full video here:

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How a Business Credit Card Can Change a Real Estate Investor’s Career

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A business credit card for real estate investing: do you really need it?

There are two major things a real estate investor needs: easy, fast, and cheap funding and a good credit score to secure that funding.

Using a business credit card as a real estate investor can be the answer to both of these problems. Let’s go over exactly how a business card could change your career.

The Credit Benefits of Using a Business Credit Card

So, why business credit cards? They’re a no-brainer alternative to using your personal cards for your real estate investments.

Most real estate investors use a credit card to pay for the expenses involved in fixing up properties. Doing this, however, raises your balance, which increases your usage. Usage makes up 30% of your credit score, so keeping high balances on your personal card can significantly lower your score.

It’s important to get all investing expenses off your credit. It not only impacts your business, but it impacts your personal life, too. When you need a personal mortgage, or a new car, or a boat… Your lender will check your credit, and they’ll see the bad score if your usage is out of whack from your business.

A business credit card solves your credit problems in two ways:

  • It helps your credit score. Moving these balances onto a business card takes them off your personal credit. Business credit won’t impact your personal score. This will allow you to get better outside funding.
  • It’s a form of fast, easy, cheap funding. It still allows you the convenience of a credit card – and sometimes at a better rate.

The “best” business credit card for a real estate investor is one that does not show up on your personal report.

The Importance of Credit Score in Financing

In all financing, your credit score is the main driving force. Credit score decides:

  • How many lenders will offer you money
  • Your loan-to-values
  • All terms and rates.

By raising your score, you get better financing. Better financing opens up more options for buying deals – you have more money available to you, plus more flexibility and speed in getting that money to buyers.

The business credit card is the simplest way to make that credit score jump for investors.

Business Credit Card vs Corporate Credit

Business credit cards are not like corporate credit.

You can apply for a business credit card and have it back in close to a week. Corporate credit cards are a bit harder. It involves building corporate credit and going through Dun and Bradstreet – which all takes months or years.

Business credit cards are easy, fast, and can be used every day. All you need is a business, and business name, a bank account, and a decent credit score. (Need to lower your usage to improve your score before you get a business card? Ask us about a usage loan.)

As soon as you get a business card, you can start using it to pay for contractors and supplies, which will free up your personal credit cards and raise your score.

Business Credit Card vs Personal Credit Card

One main difference between a business and personal credit card is that a personal one reports on your score and the (right) business one doesn’t.

For a personal card, you must keep your balance less than 30% of your limit. On a business card, you can max it out. In fact, credit card companies actually like when you use more of your business’s limit, and they’ll give you more credit for doing it.

Using a lot of credit is actually a benefit on the business side.

Making Real Estate Investing Easier and More Profitable

Our primary focus is making investing easier on the funding side. There are many ways to fill your “money buckets,” whether it’s business credit cards, HELOCs, real people’s money, or loans.

We want to help you with all of it. Reach out at Info@TheCashFlowCompany.com for more step-by-step help on business credit cards and other valuable funding sources.

You can also check out our YouTube channel for more info on real estate investing and funding.

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How to Fix Credit Usage Quickly

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High usage lowers your score. Here are 3 ways to fix credit usage quickly.

From our 20+ years of working with real estate investors, the number one reason we see them pay too much for funding is their credit scores are artificially lowered by their normal business needs.

How does this happen? And how do you fix it?

How Usage Impacts Your Credit Score

Many investors put their business expenses on a personal credit card. As long as it gets paid off eventually, no problem, right?

Unfortunately, when the ratio between your balance and your credit limit is high (aka, credit usage), your credit score takes a hit.

But you need credit cards to keep projects (and your business) growing.  The problem is: you either have to wait until you pay off the cards after selling the current project to start your next project, or… Pay over-inflated prices for money.

Let’s look at 3 ways to fix that.

3 Ways to Fix Credit Usage Quickly

  1. Move the cards off your personal name and onto business cards that don’t report on your credit. Some business cards do reflect on your personal credit, so make sure to ask about that before committing to a card. Here is one option you could look into.
  2. Call your current cards and ask them to raise your available limits. The problem isn’t that your balance is high. The real issue is that you’re using too high a percentage of your credit.
  3. Obtain a private loan that does not report on credit to pay off the cards. This raises your score so you can get better funding before paying off the card.

Getting Help to Fix Credit Usage

Interested in discussing a usage loan? Let us know here.

For more info on getting credit ready for leverage, you can watch these videos.

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How to Get Cash From a Credit Card

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Credit Myth: “I can’t get cash from a credit card for my real estate investments.”

We believe every real estate investor benefits from having a business credit card.

But only so many types of expenses can actually be put on credit. What if you need cash to cover a down payment, earnest money, paying certain contractors, and more?

There are lots of expenses in real estat investing that don’t take a credit card. So, how much good is a business card, really?

Fortunately, there’s a simple way to get cash from a credit card.

Getting Cash from a Credit Card

Most credit cards come with an option for a cash advance. But these come with limits that are usually well below what you need for cash purchases in the real estate world.

So how can you pull off getting cash from your credit card even above your credit card’s cash limit?

There’s a service called PlastiQ.

They charge your card and convert it to a wire, ACH, or check. So you can use up your full credit limit to as cash funds.

PlastiQ does charge a fee for this service, but it’s typically lower than your credit card company’s advance fee.

If you want to talk to someone about this service, here is a direct contact for you: Michael Locke, michael.locke@plastiq.com.

(This is not a paid referral – just a service we really think most investors should have in their bag of tricks.)

More on Credit & Investing

Have other questions about using credit cards in real estate investing? Need help setting it up? Reach out to us at The Cash Flow Company. We’re always happy to help.

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Business Credit Card FAQs: Can You Get One with Bad Personal Credit?

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If you have bad personal credit, can you still get a business credit card?

As a real estate, you may be wondering how to get a business credit card and what sort of credit you need.

It can be challenging to secure credit when your personal credit score is less than ideal, but it’s not impossible. In this post, we’ll explore some tips and strategies for getting a business credit card with bad personal credit.

Personal Credit is Key to Business Credit Card Success

First, it’s important to understand that you’ll need a good credit score to get business credit cards. A credit score of at least 700 is usually the minimum requirement, with higher scores providing access to larger limits and more card options.

Assuming you have everything you need to get a business card, including a high credit score, a business or sole proprietorship, and a good, non-real-estate related business name, getting a credit card is relatively straightforward. 

Go to a site like bankrate.com or Credit Karma to pick the card that’s best for you. You can also visit Nav’s list of business cards to compare different types.

If you keep balances, then you may want to look at cards with 0% intro rates. You can change them out every year and save a lot of money.

Business vs Corporate Lines

It’s worth noting that business credit cards and personal lines of credit are different from corporate credit.

Business credit is typically based on your personal credit score and requires you to personally sign on the debt. 

Corporate credit, on the other hand, is based on your Dun and Bradstreet score and does not require you to personally guarantee the debt. Obtaining corporate credit can be a longer process, and it’s not common for small companies to obtain credit at the corporate level.

Resources for Business Setup and Credit Boosting

If you need to set up a business or improve your credit score, reach out to us at The Cash Flow Company. We have ways to help raise your credit score fast, and can guide you in setting up a business.

You can also check out Fund & Grow. Ask us about the discounts they gave us to pass on to you!

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How to Get a Business Credit Card (And Get Better Loans)

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Using a business credit card changes your RE career. Here’s how to get one.

Real estate investors should think of their investment projects as a business. And a huge step in propelling your business forward is to get a business credit card.

A card for your business can solve some major credit-related problems. Here’s what you need to get one.

What You Need to Get a Business Credit Card

There are three main things you need before you can get a good credit card with an easy process. You need good credit, a business, and a generic business name:

  • Good personal credit. The higher your score, the better your options are for card terms.
  • A business. (A sole proprietorship counts). The longer you’ve been in business, the better. But bare minimum, it will need to be a couple months old and have a bank account.
  • A generic name. Additionally, the process will be smoother if the business’s name doesn’t sound like a real estate or lending company.

How to Get One

Do you have the credit, the business, and the right name? If so, then getting a business credit card for real estate is easy.

Go to a site like bankrate.com or Credit Karma to pick the card that’s best for you. You can also visit Nav’s list of business cards to compare different types. Fund & Grow also has some great options you could look into.

If you keep balances, then you may want to look at cards with 0% intro rates. You can change them out every year and save a lot of money.

Once you stop putting your projects’ expenses on your personal card, your credit will be more free for investment opportunities.

Need Help Setting Up a Business Card?

Not sure how to set up a business? Don’t have the right credit to open a card? Reach out to us – we have solutions to fix this quickly.

And lastly, you can also check out Fund & Grow. Ask us about the discounts they gave us to pass on to you!

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Solve Your Credit Problems: Business Credit Cards for Real Estate Investors

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Here’s how business credit cards for real estate investors impact your credit.

You rack up business expenses on your personal credit card for your real estate investing business, and now… Your credit score is too low to get more loans to keep your real estate investing business going.

What’s the answer to this dilemma? Business credit cards for real estate investors.

Personal Credit vs Business Loans

A lower credit score makes it harder to obtain the loans you need in your personal life, such as:

  • Car loans
  • Home loans
  • Student loans
  • Credit cards
  • Boat loans

But your personal credit doesn’t only impact your personal loans. It also impacts the loans you get for your real estate business – which are based on your personal credit score. Whether or not you can get a loan, or how good the terms of the loan is, depend on your credit score.

You need credit cards to keep your real estate projects and business going. What you don’t need, however, is that credit usage driving down your personal score and costing you tens of thousands to hundreds of thousands of extra interest over the years.

What Do Business Credit Cards Do For the Real Estate Investor?

Business credit cards can help solve this problem of usage.

Business credit cards for real estate investors remove your balances from your personal credit, fixing the problem created by the need to use the cards for your projects.

These cards don’t show up on your personal credit, so they don’t drive down your score or get counted against your debt ratios for new loans.

Your business expenses become business debt when put on a business card.

Getting a Business Credit Card as an Investor

Using a business credit card as an investor gives you the benefit of using a card, making accounting easier and not negatively impacting your personal score.

If your investing career is a business, you should be working to obtain a business credit card. Reach out to us to ask how to get started.

And for more credit score tips, check out these videos.

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