Tag Archive for: elff

How Does Credit Score Impact DSCR Loans?

Categories:

What do you need to know about your DSCR loans so your investing is easy, lucrative, fun, and fast?

DSCRs are investor-friendly loans. Banks calculate these loans based on the break-even point between the income of the property (rents) and the payments for that property (taxes, insurance, HOA, etc.). 

Let’s look at an example to see how credit score can impact your DSCR loans:

Once you subtract your expenses from the monthly rent, you’re left with $2,100. This means that, in order to maintain a DSCR ratio of 1 (the minimum to break even), you need a loan that has monthly payments of $2,100 or lower.

In the following example, Investor 1 has maintained a high credit score while Investor 2 has dipped below most banks’ minimum requirements.

In the two examples above, everything is the same except for the credit scores, and the effect is significant. Investor 2 can’t get a loan to refinance, and they’re either going to have to sell the property or keep their original loan for far longer than they wanted. 

Regardless, the person with the higher score is able to move through the investing process easily, lucratively, and quickly.

A bad credit score can tank your leverage and sabotage your investing by creating unnecessary roadblocks for your projects. 

In summary, leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

 

Read the full article here.

Watch the full video here:

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Setting Up Your Real Estate Business Plan

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Making your real estate business plan Easy, Lucrative, Fun, and FAST is a critical component to your success as an investor!

A while ago, Joe Polish from I Love Marketing began using the acronym “E.L.F.” to describe an easy, lucrative, and fun business.

However, in the real estate world, time is everything. While we totally support easy, lucrative, and fun real estate investing, we also recognize that we need to move FAST.

How Do You Set Yourself Up to Win?

You need to learn to play the leverage game. Leverage (using other people’s money in the form of loans and gifts) is what makes real estate investing lucrative and accessible. Having the right leverage when you need it can really make or break your business.

And the truth is this:

Leverage is significantly affected by your credit score.

One of the first steps in your real estate business plan ought to be checking out your credit score.

1. Switch to business credit cards.

We’ve talked previously about the importance of not using personal credit cards for business-level investing. 

Most personal credit cards simply are not designed for the level of usage needed in the real estate investing business. Because of the quantity of purchasing necessary for most fix-and-flips, you may want to look into business cards that have higher usage limits.

2. Consider a usage loan.

Additionally, if you are in a situation where your credit score is negatively affected by high usage, don’t worry. You can look into a usage loan.

We offer them here at The Cash Flow Company, or you can check out our partner company Hard Money Mike. 

3. Understand the need for speed.

A good credit score can dramatically speed up the investment process.

Leverage makes real estate investing an even playing field for everyone out there, but credit scores can limit your leverage if you’re not careful. 

A good credit score opens doors and makes everything cheaper, easier, faster. 

To E.L.F.F. the real estate business, you need to set yourself up to win.

 

Read the full article here.

Watch the full video here:

by

Understanding Leverage, Credit Score, and Your Money Bucket

Categories:

What do you need to know about your credit score and money bucket so your investing is easy, lucrative, fun, and fast?

We want to give you the tools you need to win in the real estate game. 

In a recent article, we learned how lenders look at your credit score to determine the maximum loan they’ll offer. Today, we want to apply the same principles specifically to DSCR loans.

Some investors focus on fixing and flipping properties, while others create wealth through rentals. DSCR loans are one of the most useful tools for investors that are specifically designed for rental properties.

Understanding Leverage

Leverage is what we call using other people’s money. This typically comes in the form of bank loans, but it’s not limited to that.

Things like financial gifts, small loans from friends and family, your credit score, and loans from companies like Hard Money Mike can all give you leverage.

This leverage creates an equal playing field in the investing world. You don’t need to be wealthy to use leverage well.

Credit Score as Leverage

In this day and age, credit scores matter a lot. A good credit score is a powerful tool that you can use to increase your leverage.

We also sometimes talk about money buckets. Your ‘money bucket’ is the money you bring to the table. Obviously, if you’re a newer investor, your money bucket might not have as much personal money to fill it, in which case credit score matters even more.

However, strategically using your credit score, credit cards, business cards, HELOCs, etc. to fill your money bucket now is a great way to make sure you’re ready for future investing.

How to Fix a Bad Credit Score

If you have a low score, it’s typically because of 1) late payments, or 2) usage. Unfortunately, there are no quick fixes for late payments. However, if you struggle with usage issue, there are a few things you can do.

First of all, a usage issue typically happens when you’re using too high of a percentage of your monthly allowance. This means that, even though they paid off their balance on time every month, excessive use of a personal credit card can driving down your score.

Here’s the deal: personal credit cards are not built to handle consistent real estate investing expenses. If you’re doing consistent real estate investing, we recommend looking into business credit cards.

Business cards often have higher usage limits which are ideal for the constant wear and tear of this industry.

You can also look into secured usage loans as a way to quickly boost your credit score.

Main Money Bucket Takeaways

Leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

To help you get prepared, you can explore our website where we have free tools you can download to help you get organized, including a DSCR calculator and a business credit card marketplace.

If you’re interested in learning more about how you can E.L.F.F. your investing, feel free to reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

 

 

Read the full article here.

Watch the full video here:

by

DSCR Loan Approval: E.L.F.F. Your Rental Properties

Categories:

What do you need to know about your DSCR loan so your investing is easy, lucrative, fun, and fast?

We want to give you the tools you need to win in the real estate game. 

In a recent article, we learned how lenders look at your credit score to determine the maximum loan they’ll offer. Today, we want to apply the same principles specifically to DSCR loans.

Some investors focus on fixing and flipping properties, while others create wealth through rentals. DSCR loans are one of the most useful tools for investors that are specifically designed for rental properties.

Understanding Leverage

Leverage is what we call using other people’s money. This typically comes in the form of bank loans, but it’s not limited to that.

Things like financial gifts, small loans from friends and family, your credit score, and loans from companies like Hard Money Mike can all give you leverage.

This leverage creates an equal playing field in the investing world. You don’t need to be wealthy to use leverage well.

Credit Score as Leverage

In this day and age, credit scores matter a lot. A good credit score is a powerful tool that you can use to increase your leverage.

We also sometimes talk about money buckets. Your ‘money bucket’ is the money you bring to the table. Obviously, if you’re a newer investor, your money bucket might not have as much personal money to fill it, in which case credit score matters even more.

However, strategically using your credit score, credit cards, business cards, HELOCs, etc. to fill your money bucket now is a great way to make sure you’re ready for future investing.

How Does Credit Score Impact a DSCR Loan?

DSCRs are investor-friendly loans. Banks calculate these loans based on the break-even point between the income of the property (rents) and the payments for that property (taxes, insurance, HOA, etc.). 

Let’s look at an example to see how credit score can impact your DSCR loans:

Once you subtract your expenses from the monthly rent, you’re left with $2,100. This means that, in order to maintain a DSCR ratio of 1 (the minimum to break even), you need a loan that has monthly payments of $2,100 or lower.

In the following example, Investor 1 has maintained a high credit score while Investor 2 has dipped below most banks’ minimum requirements.

In the two examples above, everything is the same except for the credit scores, and the effect is significant. Investor 2 can’t get a loan to refinance, and they’re either going to have to sell the property or keep their original loan for far longer than they wanted. 

Regardless, the person with the higher score is able to move through the investing process easily, lucratively, and quickly.

A bad credit score can tank your leverage and sabotage your investing by creating unnecessary roadblocks for your projects. 

How to Fix a Bad Credit Score

In the example above, Investor 2 struggled with a usage issue. This means that, even though they paid off their balance on time every month, excessive use of their personal credit card ended up driving down their score.

Here’s the deal: personal credit cards are not built to handle consistent real estate investing expenses. If you’re doing consistent real estate investing, we recommend looking into business credit cards.

Business cards often have higher usage limits which are ideal for the constant wear and tear of this industry.

You can also look into secured usage loans as a way to quickly boost your credit score.

Main DSCR Loan Takeaways

Leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

To help you get prepared, you can explore our website where we have free tools you can download to help you get organized, including a DSCR calculator and a business credit card marketplace.

If you’re interested in learning more about how you can E.L.F.F. your investing, feel free to reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

by

The Key to ‘ELFF’ing the Real Estate Game

Categories:

Making the real estate game Easy, Lucrative, Fun, and FAST is a critical component to your success as an investor!

A while ago, Joe Polish from I Love Marketing began using the acronym “E.L.F.” to describe an easy, lucrative, and fun business.

However, in the real estate world, time is everything. While we totally support easy, lucrative, and fun real estate investing, we also recognize that we need to move FAST.

Leverage (using other people’s money in the form of loans and gifts) is what makes real estate investing lucrative and accessible. Having the right leverage when you need it can really make or break your business.

And the truth is this:

Leverage is significantly affected by your credit score.

How Does Credit Score Affect Leverage?

Having a high credit score often comes with many perks. You might get offered better rates or terms, asked fewer questions, and experience faster approvals with less paperwork.

Unfortunately, while your credit score might make the loan process easier, a bad credit score can make your life a lot more difficult.

Let’s Check Out a Scenario…

If we look at a hypothetical purchase price of $375,000. In order to make the property cashflow, all our hypothetical investors must maintain a monthly mortgage payment of $2,000.

Even though each investor is looking at the same property and mortgage payment, their credit score affects their other payments.

Our Investors:

  • Jessica: She’s a dedicated investor who takes care of her credit, monitoring her score and keeping investment payments on business cards.
  • John: He uses personal credit cards for all his investments which has resulted in a score just above the minimum eligibility requirement for most traditional loans.
  • Sammy: He doesn’t monitor his credit and is convinced the banks just hate him. He never bothers to check his credit score.

The Numbers:

Each of our imaginary investors end up in a different financial situation purely based on their credit score. 

Even though their monthly payments are the same, Jessica ends up getting much more money at a lower rate. Meanwhile John and Sammy are stuck with smaller loans, less leverage, and a slow-moving process.

The Need for Speed

In our example above, Jessica has the advantage over these two investors because she can move through projects faster. She isn’t stuck waiting for approvals or trying to come up with so much additional money outside of her primary loan. 

Leverage makes real estate investing an even playing field for everyone out there, but credit scores can limit your leverage if you’re not careful. 

A good credit score opens doors and makes everything cheaper, easier, faster. 

To E.L.F.F. the real estate business, you need to set yourself up to win.

 

Read the full article here.

Watch the full video here:

by

How to Make Your Real Estate Business E.L.F.F. 

Categories:

Making your real estate business Easy, Lucrative, Fun, and FAST is a critical component to your success as an investor!

A while ago, Joe Polish from I Love Marketing began using the acronym “E.L.F.” to describe an easy, lucrative, and fun business.

However, in the real estate world, time is everything. While we totally support easy, lucrative, and fun real estate investing, we also recognize that we need to move FAST.

How Do You Set Yourself Up to Win?

You need to learn to play the leverage game. Leverage (using other people’s money in the form of loans and gifts) is what makes real estate investing lucrative and accessible. Having the right leverage when you need it can really make or break your business.

And the truth is this:

Leverage is significantly affected by your credit score.

How Does Credit Score Affect Leverage?

Having a high credit score often comes with many perks. You might get offered better rates or terms, asked fewer questions, and experience faster approvals with less paperwork.

Unfortunately, while your credit score might make the loan process easier, a bad credit score can make your life a lot more difficult.

Let’s Check Out a Scenario…

If we look at a hypothetical purchase price of $375,000. In order to make the property cashflow, all our hypothetical investors must maintain a monthly mortgage payment of $2,000.

Even though each investor is looking at the same property and mortgage payment, their credit score affects their other payments.

Our Investors:

  • Jessica: She’s a dedicated investor who takes care of her credit, monitoring her score and keeping investment payments on business cards.
  • John: He uses personal credit cards for all his investments which has resulted in a score just above the minimum eligibility requirement for most traditional loans.
  • Sammy: He doesn’t monitor his credit and is convinced the banks just hate him. He never bothers to check his credit score.

The Numbers:

Each of our imaginary investors end up in a different financial situation purely based on their credit score. 

Even though their monthly payments are the same, Jessica ends up getting much more money at a lower rate. Meanwhile John and Sammy are stuck with smaller loans, less leverage, and a slow-moving process.

The Need for Speed

In our example above, Jessica has the advantage over these two investors because she can move through projects faster. She isn’t stuck waiting for approvals or trying to come up with so much additional money outside of her primary loan. 

Leverage makes real estate investing an even playing field for everyone out there, but credit scores can limit your leverage if you’re not careful. 

A good credit score opens doors and makes everything cheaper, easier, faster. 

To E.L.F.F. the real estate business, you need to set yourself up to win.

How to Set Yourself Up For Success

We’ve been in the business for a long time and there are a few important changes you can make to easily improve your investing.

1. Switch to business credit cards.

We’ve talked previously about the importance of not using personal credit cards for business-level investing. 

Most personal credit cards simply are not designed for the level of usage needed in the real estate investing business. Because of the quantity of purchasing necessary for most fix-and-flips, you may want to look into business cards that have higher usage limits.

2. Consider a usage loan.

If you are in a situation where your credit score is negatively affected by high usage, don’t worry. You can look into a usage loan.

We offer them here at The Cash Flow Company, or you can check out our partner company Hard Money Mike. 

We’re Here to Help!

We invite you to take advantage of our 20+ years of experience and check out the programs and free tools we’ve specifically designed to help new investors like you. 

If you have questions or would like to discuss loan options, please reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

With the right knowledge and leverage, all of us can have an E.L.F.F. real estate business!

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