Tag Archive for: personal credit score

5 Simple Steps to Starting a Successful Business

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5 Simple Steps to Starting a Successful Business

Many real estate investors and contractors wonder how they can get everything done that they need to. From setting up the EIN to naming the business, it can all be daunting. Today we are going to discuss the 5 steps to starting a successful business in order to get you on the right path quickly and easily. 

What are the 5 simple steps to starting a successful business?

#1: Make sure that your personal credit is set up for success. This will look differently for each person, so be sure to focus on the areas that need improvement.

#2: Define your business by deciding what the business is and how many businesses you want.

#3:  Decide the name for your business. It does help to have a parent company with no specified direction. Not only will it simplify things for you, but more importantly it will smooth things out for the banks for future financing needs. 

#4: Create an EIN by registering the company with the secretary of state.Setting this up correctly will ensure that you are seen as a business not only to lenders, but to clients as well. 

#5: Define your goals. Be very clear with your goals! Where do you want to go with your business, how many properties do you need, do you need to buy machinery? All of these goals need to be established first and foremost when starting your business. 

You are not alone!

There are a lot of companies out there who can help you through the process of setting things up correctly. They can help you find the right bank for your needs, register for an EIN, and even complete a DBA to change the name that you are working under. Contact us today to find out what you need to do to get started and ways you can set yourself up for success.

Establishing your goals are the key to success! 

Even though we have goals as #5 on our list, it really should be first and foremost in all of your business decisions. Those who don’t have their goals established will only focus on completing a checklist, which will result in more work. Maybe your goal is to buy five more properties this year. Another person’s goal might be to scale their business so that they can bring on two more employees. No matter what the goal is, make sure that you achieve it using your company name. In doing so, you will be able to work backwards and determine the steps you need to take in order to complete your goal.

Fitting into the lending box.

Those who establish their goals in the beginning are able to create a roadmap to success. As a result they can then begin looking for banks, as well as vendors, who have the products they need to succeed. Just to clarify, vendors can include home depot, lowes, and the gas company. These are just a few of the companies that can help you build business credit if you do it correctly. It is important that you get into the charge accounts as well. This will help you to not only grow your business, but build  your business credit score as well.

Build the migration from personal credit to business credit.

Finding the right vendors can help you begin the transition from personal credit to business credit. By having business credit you will be able to open more doors that will allow you to reach your business goals. Do you need a business credit card? Contact us today to find out more! 

Play the game to win it.

Real estate investing is all about leverage. In order to be successful in this community, you need other people’s money, loans, and debt. This will allow you to buy properties, as well as fix up properties. Investors and contractors who take the time to work on their credit will be able to open more doors than they would have otherwise. It is important to remember that times have changed and will continue to do so. Those who can set things up correctly, take the steps to get there, and focus on the quickest steps will have a greater chance of winning the real estate game!

Watch our most recent video to find out more about the 5 Simple Steps to Starting a Successful Business.

Are you starting a business and not sure where to begin? Contact us today to get on the right path! 

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How to Overcome Your Fear of Real Estate Investing

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How to Overcome Your Fear of Real Estate Investing

Real estate investing can be daunting for many people. They often wonder what they have to do in order to apply and be approved for multiple loans. So how do you get started and overcome your fear of real estate investing? Let’s take a closer look.

Good properties make the difference.

When you are selecting properties for your real estate investments it is imperative that you have good properties. What is a good property? A good property is one that meets all of your numbers, and will help you move forward. If the property doesn’t pay for its own mortgage and fix up, then don’t do it. By taking a property that does not cash flow, it will become a burden as opposed to an asset. 

What do we mean by “covers everything”?

When you get into an investment and take out a loan, you have to make sure that the business covers everything on that loan, so that it doesn’t become a worry. Just to clarify, the business is the property. For example, if you have a rental property, then the rents have to not only pay the mortgage payment, but they also have to cover additional expenses as well. If you have a mortgage payment of $2,000, then you need to charge $2,500. This amount will not only cover the mortgage, but provides extra money for fix up costs or other expenses. 

Keep personal and business separate.

The key to being successful in real estate investing is to separate your business expenses from personal expenses. At no time should the property cost you money out of your personal funds. It is important to be safe and secure in order to protect your personal credit score, and ensure your financial stability. Here at The Cash Flow Company we strive to help you succeed. Contact us today to find out more about setting up your business correctly in order to prevent credit score stress and financial strain. 

In conclusion.

Overcome your fear of real estate investing by doing the research and setting yourself up for success. Real estate investors need to set the business up correctly, know the numbers, and be prepared. 

Here at The Cash Flow Company we can get you started on the path of success. Contact us today to find out more about getting started in real estate investing. Also discover what you need to do to overcome your fear.

Watch our most recent video about Overcoming your fear of real estate investing to find out more! 

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What Credit Score Do You Need To Succeed?

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What Credit Score Do You Need To Succeed?

Investors are struggling in this current economy with the impact that business expenses are having on their personal credit scores.  Alex Erlich, a credit advisor and educator, is joining us today to discuss the importance of leveraging business credit vs personal credit. Credit and debt are not equal in any shape or form, but we have to play the game to win it. 

The importance of Leverage

So many investors are putting business expenses on their personal credit. Resulting in 70-80% of clients becoming overextended on projects, and maxing out their credit cards. By separating personal and business credit, it will prevent further strain on your personal credit, increase loan eligibility, and create more leverage. What exactly do we mean by leverage? Leverage is how much you are eligible for and what it looks like on paper. Leverage is the King in real estate. Having more leverage allows for more opportunities, not only your business, but for your personal life as well. 

The ideal Credit Score

MyFico.com is the best place to obtain credit score information. This site not only provides an overall credit score, but it also separates scores into 40 different categories. It can be an information overload, however, by going straight to the source it provides you a cost free and spam free way to gather all of the information you need. So what is the ideal credit score that lenders are looking for? The ideal credit score range should be between 680 and 720. However, with the current economy, banks are increasing their minimum requirements to 720 and above. How do you get from 680 to 720? We can help you discover ways to improve your scores quickly to get you back in the game.

Don’t let your personal credit score impact your business success!

The faster you can separate your personal credit from your business credit, the better your personal credit score will be. We can guide you through the steps. From establishing your business, to finding the right business credit cards, and even providing a 911 loan, we have the tools to help you win.

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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Credit usage: business credit cards vs personal credit cards

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Credit usage: business credit cards vs personal credit cards

The majority of investors today are struggling with their personal credit score. This is due to the fact that they are putting business expenses on personal credit cards. How can you make things easier, faster, and cheaper? The answer is making the switch to business credit cards! This is a simple step that every investor should be taking to alleviate future strain on their personal credit score. By having higher credit scores, investors will in turn have more leverage to grow their business.  We can help guide you through the migration to business credit cards. 

First let’s look at Personal Credit Cards 

High credit scores are important for investors because it creates the leverage and funding they need to grow their business. Almost every investor runs up their personal credit card balance, by putting too many business charges on them. Thus, jeopardizing their personal credit score because of the high credit utilization rate. For personal credit cards, MyFico only allows for a 20% utilization rate before it impacts your credit score. However, business credit cards do not have the same restrictions. Instead, you are able to use the entire credit limit without having to worry. In having better credit scores, it opens the door to endless possibilities that will create wealth.

Next let’s look at Business Credit Cards 

Switch to business credit cards today! Business credit cards are the most important thing that investors can do to ensure success. They not only provide funding, but also the leverage required to create further growth. Many investors have heard of corporate credit and have taken the steps to get started down that path. Unfortunately, this option results in years of hard work and multiple steps before any progress can be made. Business credit cards on the other hand, are quick to set up, extremely flexible, and most importantly they will not impact your credit score. Eliminate the cash crunch by separating your personal credit from your business.

Get on the right track today!

By using personal credit cards for business expenses, you are jeopardizing your credit score and endangering the success of your business. Do not join the 80% of real estate investors who fail. Make the switch to business credit cards as soon as possible! We can help guide you through the entire process from setting up your business correctly, to researching credit cards, and can even provide usage loans to get you back on track.

Watch our most recent video to discover more about the importance of business credit cards and how we can help guide you to success.

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Empower Your Business: Business Credit Vs Personal Credit

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Empower Your Business: Business Credit Vs Personal Credit

Alex Erlich, a credit advisor and educator, is joining us today to discuss the ins and outs of what real estate professionals and other companies are struggling with in this current economy.The main focus for today’s conversation is the importance of leveraging business credit vs personal credit. Credit and debt are not equal in any shape or form, but we have to play the game to win it. Knowing the rules of how to play will get you in the best position to win! Whether it’s the credit card game, credit game, or the leverage game, you need to create a leverage profile. Let’s take a closer look to discover what you need to not only establish your company, but ways that can set you up for success.

How to leverage business credit instead of personal credit?

So many people are putting business expenses on their personal credit. Unfortunately that is not as efficient as one might assume. 70-80% of clients are overextended on projects, and have maxed out their credit cards. Thus making it extremely difficult to be approved for additional loans moving forward without further impacting personal credit scores. In order to prevent this landslide, we need to approach business expenses more professionally and keep everything business focused. In doing so, it will prevent further strain on your personal credit, increase eligibility, and create more leverage. What exactly do we mean by leverage? Leverage is how much you are eligible for and what it looks like on paper. Leverage is the King in real estate. Having more leverage allows for more opportunities, not only your business, but for your personal life as well.  

How do we turn the focus from personal to business? 

First and foremost individuals need to acknowledge that they have a business. Surprisingly, many business owners don’t consider themselves to be entrepreneurs. From relators, to contractors, and everyone in between, they typically consider themselves to be employees of the overwriting company. However, this mindset needs to change! They should not only view themselves as entrepreneurs, but also a representation of the brand. Another component that should be evaluated are items on your personal credit that need to be removed. This will in turn prevent you from personal liability as you continue to grow your business.

What is another problem that business owners have to navigate?

The quick and simple answer to this question is social media. The majority of info is on TicTock, Twitter, and even on reals. Even though not all of it is bad information, it’s not always complete information. It is imperative that any information found on social media should be researched further. In regards to credit score expectations, there is a lot of misinformation on the internet as well. Do your research and always seek out support from professionals if you have questions.

Where do you go for correct credit score information?

 MyFico.com is the best place to get not only basic credit score information, but specific scores that can impact you differently depending on what you are needing them for. It can be information overload with 40 scores available, however, by going straight to the source it provides you a cost free and spam free way to gather all of the information you would need to make a financial decision. Ideally you should have a personal credit score of 680 to 720 in order to qualify for various lending options. Ultimately it is better to be at a 720, but how do you get there? Here are the top 4 things you can do to make your personal credit score improve quickly.

First:

Do not open new credit unless you have talked with a professional and they have created a step by step outline. At The Cash Flow Company we can help you apply for a 911 loan instead to take care of the one or two items that are holding you back financially.

Second:

Remove any derogatory information that is on your credit report. Now is the time to see what can be done about it and how to leverage it. Especially if it’s a local bank. Something from three to five years ago that already has a zero balance, should be removed. Be methodical and purposeful.

Third:

Take into account your inquiries. If you have been shopping for money and applying for things, look into a fast inquiry removal. This can make a substantial positive impact on your credit score. If you are using your personal credit to inquire about your business, those should all be disputed as well. 

Fourth and final:

Relationships are your key to a successful business. Determine which companies are having the hardest time or tightening their budget. These are the ones that will leave you behind so they can swim upstream in search of bigger and better clients. By building local, human, real relationships, the more successful you will be.

Personal Relationships

In working with real estate investors, realtors, and contractors, a lot of what we enjoy doing is working human to human. In forming that connection with our clients, we are able to focus on how we can make them better both as a person and as a company. They are all unique and don’t all need the same things. For one client they may need a little rearranging to raise their credit score, while others could require a longer process to get back on the right path.  By forming personal relationships with local banks, you are more likely to be approved for lines of credit, credit cards, or loans that can in turn grow your company. Another benefit to going local is that regional banks or smaller banks, don’t have the same guidelines as the big banks. They can do “make sense deals” when they make sense. 

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

  1. Make sure personal credit is setting you up for success. Identify and separate business credit vs personal credit to get your credit score back on track. 
  2. You need to decide what the business is and it’s subcategorization. Banks will look at the NAICS to determine what industry you are in, as well as the subcategorization when you are applying for business funding.
  3. How do you select a name for your  business? Will there be a parent company? 
  4. 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 will ensure that you are seen as a business not only to lenders, but to clients as well. 
  5. Be very clear with your goals! Where do you want to go with your business, how many properties do you need, do you need to buy machinery? All of these goals need to be established first and foremost when starting your business. 

In conclusion, it is important that you are establishing your business correctly from day one and forming positive relationships that will set your business up to win. The faster you can separate your business vs personal credit, the better your personal credit score will be, and will in turn create more leverage for future growth. All the little tricks will get you there! We can help guide you through this process! 

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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Are You Making These Common Real Estate Investing Mistakes?

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Are You Making These Common Real Estate Investing Mistakes?

There are a number of common real estate mistakes that investors are facing. These mistakes occur when buying and holding rentals, flipping properties, and dividing land. Nowadays, these common real estate investing mistakes undoubtedly create frustration and can lead to defeat. With this in mind, let’s take a closer look at the five major roadblocks to make sure that they don’t affect you!

First, Cash Flow 

The first mistake that real estate investors make is immediately purchasing a property before evaluating the cash flow. To put it briefly, you want to make sure your profits are in fact greater than your expenses. Avoid this mistake by making a plan and know your numbers upfront! 

Second, Understanding Escrow

The second mistake is not understanding escrow, let alone what is needed to receive the escrow funds. Escrow is a portion of the loan that a lending company puts aside for repairs to the property. By understanding your lenders policies, you can optimize your profits by completing repairs quickly and correctly. 

Third, Too Many Projects

The third mistake is having too many projects. From multiple property costs to paying contractors, investors can get too big too fast. It is important to “err on the side of caution” to prevent the “finance crunch” that often occurs. 

Fourth, Rentals

The fourth mistake is not properly navigating rental cash flow. The deal needs to be a positive investment not a negative one after considering all costs. In real estate investing, you cannot afford losses or simply break even.

Fifth, Personal Credit Usage

The fifth and final mistake is the misuse of personal credit cards for business expenses. If you want to avoid spiraling into debt, then quickly set up your business and begin using a business credit card. 

By understanding these common real estate investing mistakes, you can ease your frustration, prevent a finance wall, and learn how to create a constant cash flow.

Watch our latest interview to discover more about the 5 Major Roadblocks

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Why business credit cards make real estate investing easier

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Why business credit cards make real estate investing easier

70%-80% of investors are overwhelmed with business expenses and are resorting to using their personal credit. By using personal credit cards for business expenses, investors are jeopardizing their credit score and endangering the success of their business. How can you get your personal credit in good standing and back on track? What can you do to stabilize your business expenses? The answer to both of these questions is business credit cards. Let’s look closer at how they can make your life easier.

First, personal credit scores are no longer taking the hit.

While personal credit cards are easily accessible, they make life more complicated for investors. Whether it’s a fix and flip, or a rental property, expenses can easily add up and jeopardize your credit score. Putting expenses on personal credit cards drives down your score due to the utilization rate. This in turn makes everything harder, from trying to apply for a loan, to putting more money into the investment. The ultimate solution is business credit cards because they do not impact your credit score, nor do they have the same utilization rate restrictions. This is a simple step that every investor should be taking to alleviate future strain on personal credit scores.

Second, making things easier, faster, and cheaper

How can you make things easier, faster and cheaper for your business? The answer once again is applying for and using business credit cards! Once a card is established, you can start moving expenses over to consolidate balances, thus making your life easier. They have the same benefits as personal credit cards if not more! By using them more often and making payments in chunks, investors are able to increase their credit limits quickly. In doing so, personal credit scores will increase and create more leverage for additional loans, as well as create better funding options. 

Third, we are here to get you on track.

In having better credit scores, it then opens the door to endless possibilities that will create wealth. We can help you by providing a usage loan that can be used to pay down personal credit cards. With the utilization rate then decreased, your credit score will increase, allowing you to make the switch. We can help guide you through the entire process from setting up your business correctly, to researching credit cards, and provide usage loans to get you back on track. Don’t wait for corporate credit to take effect! Call or message us today to find out more.

Watch our most recent video to discover more about the importance of business credit cards and how we can help guide you to success.

 

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The ABC’s of DSCR loans: What every investor should know

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The ABC’s of DSCR loans: What every investor should know 

Do you need additional income for rental properties without the hassle of tons of paperwork or long processing times? Let’s take a closer look at the ABC’s of DSCR loans and how they can help. There is no need for employment history, and better yet there are only a few factors that are needed to qualify. DSCR, also known as the debt service coverage ratio, calculates whether or not a property breaks even or better yet, has a positive cash flow. These investors only loans are not only simple to apply for, but they can also be used for properties that have 1 to 4 units. Larger unit sizes can also apply, however, there are normally only a few available. DSCR loans are an excellent way for investors to get a 30-year product without worrying about how long they have been in business, their income, or even their business income. 

What three factors impact DSCR loan approval? 

1. Income from the property

The main factor that impacts an approval for a DSCR loan is income. When an investor is buying a property, the lenders will look at personal income, business income, or both. In almost all cases, lenders require two years of taxes showing a businesses income prior to approval. If you are a new investor, or like to write everything off, you will not meet the necessary requirements to apply. This is where a DSCR loan comes into play. The only thing that is taken into account, is whether or not you are going to break even with the rental property. The lenders will then look at the mortgage payments, property taxes, property insurance, HOA, and flood insurance to determine if you are eligible.

2. Your personal credit  

Especially in the real estate industry, your credit score plays a huge role in your success as an investor. Here at The Cash Flow Company, we see investors who struggle to pay bills on time, overuse credit cards, and don’t use enough credit. This greatly affects your personal credit scores. What can you do to get things turned around? The most important thing is to separate your personal credit from your business expenses to raise credit scores. In turn, it will allow for better rates with better terms for future investments. 

3. Loan to value

The loan to value, or LTV, is the amount of the mortgage compared to the value of the property. Most DSCR loans have a max LTV set to 80% for purchase, as well as rate and term refinances. This percentage then changes to 75% LTV for cash out refinances.  LTV’s can go 5% higher with the right factors, but investors should expect to pay a higher rate. In summary, the lower the loan to value, the less risk for the lender.

DSCR loans are incredibly helpful for investors who need additional income for rental properties. Not only are they fast and easy to apply for, but they also allow you to apply before your investment property is up and running. This is done by appraising properties in the current market and estimating the rent. In doing your research and estimating your cash flow, the sky’s the limit for success! Would you like to find out more and see if DSCR loans are right for you? Use our DSCR calculator to see the impact a DSCR loan can have on your investments.

Find out more about DSCR loans by watching our most recent video. 

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Business Credit vs. Personal Credit: What’s Better?

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The struggle of business credit vs. personal credit cards is the #1 thing slowing real estate investors down.

Especially in the beginning, it’s tempting to use personal credit cards to kickstart your investing adventures.

However, the use of personal credit cards on investment projects can ultimately cause significant harm to your dreams of building wealth.

The Risk of Personal Credit Cards

Using personal credit cards for the type of large-scale spending necessary in real estate investing drives up usage. 

Your credit score is calculated based on two factors: funds available and usage. High usage tanks your credit score fast. A low score can significantly damage terms of loans and your overall ability to grow your investment business. 

A Better Alternative

In order to protect your credit score, consider switching your investment spending to a business credit card.

This separates your investment usage from that personal credit score. 

Additionally, since these cards don’t penalize high usage, you can run up the balance as long as you pay it off on time. In fact, consistently high usage and good payment history can even result in the bank raising your spending limits on that business card.

Getting a business credit card is easy, and with this simple change, your personal credit score is protected. If you have a good score, lenders can confidently offer better rates and terms which will save you a lot of money in the long run.

What to Look for in a Business Credit Card 

Here’s the good news: shopping for a business credit card isn’t all that different from looking for a personal one!

  • Look for 0% interest and benefits the same as you would on a personal card.
  • Make sure you know whether or not that card will report. To protect your credit score, you’ll want to find one that doesn’t.
  • Remember: You still need to pay your bills on time. Many business cards will start reporting if you have late or missed payments.

 

Read the full article here.

Watch the full video here:

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Personal vs. Business Credit Cards: What’s Better for Investing?

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The struggle of personal vs. business credit cards is the #1 thing slowing real estate investors down.

Especially in the beginning, it’s tempting to use personal credit cards to kickstart your investing adventures.

However, the use of personal credit cards on investment projects can ultimately cause significant harm to your dreams of building wealth.

The Risk of Personal Credit Cards

Using personal credit cards for the type of large-scale spending necessary in real estate investing drives up usage. 

Your credit score is calculated based on two factors: funds available and usage. High usage tanks your credit score fast. A low score can significantly damage terms of loans and your overall ability to grow your investment business. 

A Better Alternative: Business Credit Cards

In order to protect your credit score, consider switching your investment spending to a business credit card.

This separates your investment usage from that personal credit score. 

Additionally, since these cards don’t penalize high usage, you can run up the balance as long as you pay it off on time. In fact, consistently high usage and good payment history can even result in the bank raising your spending limits on that business card.

Getting a business credit card is easy, and with this simple change, your personal credit score is protected. If you have a good score, lenders can confidently offer better rates and terms which will save you a lot of money in the long run.

Requirements for Business Credit Cards

Business credit cards are one of the best ways to make real estate investing easier and more profitable. But what do you need before you start looking for a business credit card?

1. A Business

Typically, you need to have an operating business for at least a year (though there are exceptions)  before applying for a business card. 

This isn’t quite as tricky as it may sound. You need a business account, website, billing information, etc. Essentially, you need proof that you are, in fact, operating an investment business. 

2. A Good Personal Credit Score

Even though you’re applying for a card that won’t report on your personal credit score, approval for the business card is based on your personal credit score.

If you need to raise your personal credit score before applying for a business card, we can help you with that! Usage loans essentially transfer some of that credit card spending into a separate loan that won’t tank your credit score.

Both we and our sister company Hard Money Mike offer usage loans.

3. 1–2 Personal Credit Cards

Obviously, you will need to use your personal credit cards for your investment needs in the beginning. However, if you’ve been using those well, then banks are more likely to approve a business credit card.

All in all, if you have a business, a good credit score, and a couple of credit cards already, it’s fairly easy to start the process of switching to business cards. 

What to Look for in a Business Credit Card 

Here’s the good news: shopping for a business credit card isn’t all that different from looking for a personal one!

  • Look for 0% interest and benefits the same as you would on a personal card.
  • Make sure you know whether or not that card will report. To protect your credit score, you’ll want to find one that doesn’t.
  • Remember: You still need to pay your bills on time. Many business cards will start reporting if you have late or missed payments.

Tools to Help You Find the Right Card

We want to make it easy for you to succeed as a real estate investor—no strings attached. The more you know and the more resources you have, the better equipped you are to find the right deals for you.

We’ve already done some of the work for you:

1. Business Credit Card Marketplace

Here at the Cashflow Company, we’ve partnered with Nav to help you find the right business card for you. By inputting a few pieces of information, we’ll let you know what cards match your needs (and won’t report on your personal credit score).

2. Credit Score Checklist

You can use our free credit checklist download to check the health of your credit score. What can you do to improve that score? Does it need some CPR? What are your options?

3. Other Real Estate Investing Tools

Explore our other tools to optimize your investment strategy. We have various calculators, questionnaires, optimizers, and analyzers to walk you through the various steps of the game.

Contact Us!

Credit scores are a very important piece of leverage. We want you to feel equipped and confident that you’re protecting that credit score in a smart way.

If you want to discuss your credit score, a usage loan, or business credit cards, contact us at Info@TheCashFlowCompany.com. We’re always happy to help!

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