Tag Archive for: real estate leverage

What Are the Downsides of a DSCR Loan?

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Always shop around for loans. What downsides of a DSCR loan should you look out for?

A disclaimer: you should always shop around for DSCR loans.

There is no universal underwriting for DSCR, so every lender will be a little bit different. This product is extremely segmented. So while one lender might have a deal-breaking con, another one will have all the pros you’re looking for.

That being said, let’s look at some of the potential pitfalls of a DSCR loan compared to a conventional loan.

Downsides of a DSCR Loan: Higher Interest Rate

A DSCR loan will have an interest rate somewhere between 1-3% higher than a conventional loan. Because, unlike the conventional market which is controlled by two pseudo-government agencies (Fannie and Freddie), DSCR is made up of hundreds of different investors who design these products. One lender may offer a rate of 6%, while the same client at another lender could only get 8-9%. 

 Prepayment Penalty

There are only a few states where DSCR loans don’t have prepay penalties. With a prepay penalty, there is a period (usually 3-5 years) where you must pay a fee if you want to pay off the loan. If you think you’ll want to sell or refinance the property within that time frame, DSCR might not be a cheap option for you.

For Rentals Only

DSCR loans are designed for investors with rental properties. You cannot use a DSCR loan for an owner-occupied property (aka, your personal home). These are business-based loans, so they do not follow the same standards as personal mortgages.

Credit

Since DSCR loans don’t look at your income, they do rely heavily on your credit score. Without a good score, you’ll have a hard time getting a DSCR loan (or at least one with decent rates).

Community and Loan Size

Lastly, DSCR loans aren’t ideal for smaller communities or projects. DSCR lenders typically only lend in cities with a population greater than 25,000. The lowest loan they’ll give is generally around $75,000.

How to Find DSCR Loan with the Fewest Downsides

It’s always important to shop around for the best leverage, but this is especially true for the segmented market of DSCR loans.

Not sure where to start? Reach out to us at Info@TheCashFlowCompany.com.

We work with 10-15 different DSCR wholesale companies to find the best rates, highest LTVs, and lowest credit requirements.

Read the full article here.

Watch the video here:

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The Benefits of a DSCR Loan for Investors Who Own a Rental

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How do you benefit from a DSCR loan? Why should you get one?

A DSCR loan can replace a conventional loan for real estate investors.

But what’s it all about? Let’s go over the benefits of a DSCR loan.

Benefits of a DSCR Loan vs Conventional

These loans are relatively simple:

  • There are no personal income requirements (no W-2s, tax returns, etc). Instead, it’s all based on the income and expenses of the property.
  • There are no business or experience requirements. Bank or conventional loans require a business to exist for 2 years or more before they’ll lend to you.
  • They don’t need to see your portfolio. For other loans, lenders may ask to see what other properties you’ve flipped or rented. DSCR loans only care about the rental property at hand.

DSCR loans come in all shapes and sizes (3-year, 5-year, 30-year, 40-year), with a broad variety of details depending on lenders.

What Is the “DSCR” Part?

A debt service coverage ratio loan focuses on the debt ratio of the property. Does the rent pay for the expenses?

  • Rent – The monthly income a property receives from tenants, based on comps.
  • Expenses – Despite all the expenses of a property, a DSCR loan only takes into account the mortgage payment, interest, taxes, insurance, and HOA fees.

One way to think of this ratio is: do you at least break even on this property?

To calculate a DSCR loan: Does Rent ÷ Income equal 1?

If yes, then you exactly break even. If it’s more than 1, then you have cash flow (and getting a DSCR loan will be even easier). But if this number is less than 1, the property costs more than it makes, and you’ll need a special kind of DSCR loan, likely with worse terms.

Benefits of a DSCR Loan

Let’s go over all the positives of a DSCR loan:

  • No income requirements for you – just the property.
  • It doesn’t matter how old your business is.
  • You can write everything off on your tax returns.
  • Lenders don’t consider your other properties in the underwriting.
  • You can buy in an LLC or company name.
  • They have interest-only DSCR options.
  • There is a variety of term lengths – from 3-year adjustable to 40-year fixed.
  • They can be used for short-term rentals, like Airbnb or VRBO.
  • A DSCR loan is a perfect long-term refinance loan for a flip project. It works great with BRRRR.

Read the full article here.

Watch the video here:

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Why You’ll Love Using a HELOC for Real Estate Investing

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3 ways to use a HELOC for real estate investing & an example of how it could play out for you.

A HELOC is like a large credit card attached to a house. You can re-use and pay off these funds over and over.

Let’s go over a few details you should know about how to use a HELOC for real estate investing – plus what a 100% HELOC-funded investment might look like.

3 Ways to Use a HELOC for Real Estate Investing

There are 3 main ways investors use HELOCs to fund their real estate deals:

Funding Any Deal You Want

If you have enough equity in your house, you could make a down payment, fund the rehab, or purchase the whole property with 100% HELOC financing.

We had a recent client find a great real estate deal in Oklahoma, where property and fix-up, all in, was $49,000. With a HELOC, that becomes an easy transaction to fund by yourself. You can skip all the trouble of going to a lender.

HELOC financing is especially useful for auction properties – you can get your funding within a day, pay for the property (or at least the down payment) all yourself, and stop missing great deals that cross your path.

Gap Funding with a HELOC for Real Estate Investing

Another major use for a HELOC is gap funding. Gap funding supplies money for all the smaller things a primary loan or mortgage won’t cover.

You could take money from this line of credit, and use HELOC financing for:

  • Down payment
  • Repairs and rehab
  • Earnest money, if a buyer needs funds to hold a property for you 
  • Reserves, if your primary lender requires you to have a certain dollar amount on-hand for emergencies
  • Carry costs, to make loan, insurance, and other payments during the rehab

Using HELOC is the cheapest way you could fund these gaps in your loan.

Put More Down on a Property

So the third way that people use HELOCs is to put more down on a property to get better loan terms and rates.

If the bank requires another 10% more than what you have, then you can take money out of the HELOC to use. This could mean the difference between getting back financing instead of hard money or private lending.

Even if the bank doesn’t require the extra 10%, the more you can put down upfront, the more you save overall in better rates and terms.

Even if your HELOC isn’t big enough to fund an entire project, it can help you save money in smaller ways like this.

Example of How You Could Use a HELOC for Real Estate Investing

Let’s say you have a HELOC of $100,000. How can you use that in a real estate deal for 100% HELOC financing?

1. Earnest Money

You find a property you want to put under contract, so you need $2,000 for earnest money.

Instead of going to a lender or putting up your own cash, you go to your bank, have them cut you either a cashier’s check or a check on your account, put it with the title, and now you have earnest money on your account. 

You now have $98,000 available in your HELOC. You’re only paying interest on $2,000.

2. Down Payment & Closing Costs

Next, you need to put in a down payment and closing costs of $10,000 total. You call your bank and have them wire it to the title company from your HELOC.

You now have $88,000 still available, and you’re paying interest on $12k.

3. Rehab & Extra Costs

Now you’re doing your projects. You need to make repairs, pay the mortgage or hard money loan, and cover taxes.

You could put a bunch of money from your HELOC in your checking account up-front, draw from it monthly, or ask your bank about a debit card. All the expenses could go on this card – you just have to keep good accounting.

Let’s say you’ve spent $30,000 total on mortgage payments, paying contractors, and other costs. This means you took $42,000 total out of your HELOC.

Note: You’re not paying interest on the full $100k limit of your HELOC. You only pay interest on the amount you’ve taken out – in this case, the $42k.

4. Paying It Off

Lastly, you sell the property or refinance it as a BRRRR. You take these funds and put it back on your line of credit.

Now, you have $100,000 again to use on your next project.

If you want help figuring out which HELOC is best for you, download this free, quick HELOC questionnaire.

Read the full article here.

Watch the video here:

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What Is a DSCR Loan – and What Can You Do With It?

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When should you use – and what is – a DSCR loan?

One of the most-asked questions we get:

“What is a DSCR loan?”

Where does it fit? What can we do with it? What do we need in order to get one?

In this post, we’ll go over: what is a DSCR loan, why it’s great, and where you should never use it.

What Is a DSCR Loan?

A DSCR loan replaces a conventional loan for investors. It’s never used for owner-occupied properties.

These loans are relatively simple:

  • There are no personal income requirements (no W-2s, tax returns, etc). Instead, it’s all based on the income and expenses of the property.
  • There are no business or experience requirements. Bank or conventional loans require a business to exist for 2 years or more before they’ll lend to you.
  • They don’t need to see your portfolio. For other loans, lenders may ask to see what other properties you’ve flipped or rented. DSCR loans only care about the rental property at hand.

DSCR loans come in all shapes and sizes (3-year, 5-year, 30-year, 40-year), with a broad variety of details depending on lenders.

What Is the “DSCR” Part?

A debt service coverage ratio loan focuses on the debt ratio of the property. Does the rent pay for the expenses?

  • Rent – The monthly income a property receives from tenants, based on comps.
  • Expenses – Only mortgage payment, interest, taxes, insurance, and HOA fees. DSCR loans do not consider utilities, property management, or other expenses in this calculation.

One way to think of this ratio is: do you at least break even on this property?

To calculate a DSCR loan: Does Rent ÷ Income equal 1? If yes, you exactly break even. If it’s more than 1, then you have cash flow (and getting a DSCR loan will be even easier). But if this number is less than 1, the property costs more than it makes, and you’ll need a special kind of DSCR loan, likely with worse terms.

What Are DSCR Loans Based On?

Aside from a rental with a ratio of 1 or more, there are four main considerations in a DSCR loan:

  1. Credit Requirements – Most DSCR loans look for borrowers with a 660 credit score or above. The better your credit, the better the LTV and interest rates you’ll get. With current high interest rates, you’ll want to have a score of 700 or more to get something affordable.
  2. LTVs – The loan-to-values DSCR lenders will give vary between 75 and 85 percent. For 80-85%, you can expect higher rates or higher fees.
  3. Type of Property – DSCR loans are good for up to 8-unit properties or mixed-use. Conventional loans only go up to 4 units and are much less flexible.
  4. Location – DSCR lenders are centralized in major metropolitan areas. If you’re investing in a smaller community (population of 25,000 or less), you’ll have a tougher time getting a DSCR loan.

Benefits of a DSCR Loan

Let’s go over all the positives of a DSCR loan:

  • No income requirements for you – just the property.
  • It doesn’t matter how old your business is.
  • You can write everything off on your tax returns.
  • Lenders don’t consider your other properties in the underwriting.
  • You can buy in an LLC or company name.
  • They have interest-only DSCR options.
  • There is a variety of term lengths – from 3-year adjustable to 40-year fixed.
  • They can be used for short-term rentals, like Airbnb or VRBO.
  • A DSCR loan is a perfect long-term refinance loan for a flip project. It works great with BRRRR.

Downsides of a DSCR Loan

As a disclaimer to start: you should always shop around for DSCR loans.

There is no universal underwriting for DSCR, so every lender will be a little bit different. This product is extremely segmented. So while one lender might have a deal-breaking con, another one will have all the pros you’re looking for.

That being said, let’s look at some of the potential pitfalls of a DSCR loan compared to a conventional loan.

Interest Rate

A DSCR loan will have an interest rate somewhere between 1-3% higher than a conventional loan. Because, unlike the conventional market which is controlled by two pseudo-government agencies (Fannie and Freddie), DSCR is made up of hundreds of different investors who design these products. One lender may offer a rate of 6%, while the same client at another lender could only get 8-9%. 

 Prepayment Penalty

There are only a few states where DSCR loans don’t have prepay penalties. With a prepay penalty, there is a period (usually 3-5 years) where you must pay a fee if you want to pay off the loan. If you think you’ll want to sell or refinance the property within that time frame, DSCR might not be a cheap option for you.

For Rentals Only

DSCR loans are designed for investors with rental properties. You cannot use a DSCR loan for an owner-occupied property (aka, your personal home). These are business-based loans, so they do not follow the same standards as personal mortgages.

Credit

Since DSCR loans don’t look at your income, they do rely heavily on your credit score. Without a good score, you’ll have a hard time getting a DSCR loan (or at least one with decent rates).

Community and Loan Size

Lastly, DSCR loans aren’t ideal for smaller communities or projects. DSCR lenders typically only lend in cities with a population greater than 25,000. The lowest loan they’ll give is generally around $75,000.

How Do You Find the Right DSCR Loan

It’s always important to shop around for the best leverage, but this is especially true for the segmented market of DSCR loans.

Not sure where to start? Reach out to us at Info@TheCashFlowCompany.com.

We work with 10-15 different DSCR wholesale companies to find the best rates, highest LTVs, and lowest credit requirements.

Want to figure out if your deal works with a DSCR loan before reaching out? Check out this free DSCR calculator.

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How to Find Out Your Real Estate LTV by Credit Score

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This is how lenders figure out your LTV by credit score…

Credit scores are a major factor in any kind of financing.

When you’re looking for real estate investing loans, credit score determines your down payment/LTV. In a refinance, your amount is also decided by credit score.

Let’s look closer at how lenders decide how much you get.

DSCR & Bridge Loan Interest Rate Credit Box

Lenders each have a credit sheet or credit box that they use for all borrowers.

Here’s an example of a DSCR loan credit box. It shows the maximum LTV a borrower could get depending on their credit score:

Similarly, here’s an example credit box for a bridge loan:

As you can see, a low credit score not only leaves you with a bad interest rate but also a lousy loan-to-value. In the best case, a low score gets you a 10-15% lower LTV, and in the worst case – you’re left with no loan at all.

Example Impact of Credit Score on LTV

Let’s walk through an example. Say we need to either refinance or purchase a property with $300,000.

So, what are our options based on the above credit boxes?

A 625 credit score is about the lowest most lenders will lend to in the current economy. Here’s what we could get for our $300k property:

  • Max loan amount on a DSCR loan: $210,000
  • Max loan amount on a bridge loan: $180,000

A 720 is considered excellent by most lenders. Here are the amounts we’d get from the same lenders on the same property with this score:

  • Max loan amount on a DSCR loan: $255,000
  • Max loan amount on a bridge loan: $225,000

This is up to $45,000 difference in your loan amount based solely on your credit score.

Credit Usage & Real Estate Investing Help

In short: the higher your credit score, the more funding you can receive.

The higher the funding, the lower the amount of the down payment and interest rate costs. Your credit score will always save or cost you money in real estate.

You can find out how credit impacts your rates and or cost here. Additionally, you can get quick ways to increase your score here.

We are here to help you increase your cash flow by using all means to increase the availability of cheap, easy, and quick funding.

Reach out with any questions, and for more on real estate investing, check out our YouTube channel.

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HELOC Pros and Cons: Should You Get One As an Investor?

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Is a home equity line of credit a good funding option for you? Here are a few HELOC pros and cons.

A Home Equity Line of Credit (HELOC) can be a great option for real estate leverage.

However, like any financial product, there are both advantages and disadvantages to using a HELOC for real estate investing. 

Let’s explore the pros and cons of HELOC financing, so you can decide if it’s the right choice for you. 

Pros of a HELOC

  • Little to no fees. Sometimes, you might have to pay $100 or $200 to get a HELOC on your property, but there are usually little to no fees.
  • Lower rates. You’ll see adjustable rates or fixed rates. Depends on what you get, but a HELOC is usually cheaper than private money or hard money. Rates could even be as low as bank financing. You don’t pay interest unless you’ve taken money out.
  • Quick funding. You can fund a deal in as little as one day, giving you more control over the process. You can get the money as a wire from a bank, a check, or even a debit card connected to the line of credit.

Cons to This Line of Credit

  • You must own a property. You need to own a property with equity to get a HELOC. In your owner-occupied property, most banks will go up to 95-100% of the equity. So even if you only have $20,000 in equity on your home, you can still take it out for gap funding or carry costs, even if you don’t get 100% HELOC financing.
  • You need good credit. Most banks require you to get approved through income. Both credit and debt-to-income are important factors in whether you can get a HELOC or not.
  • Misuse of funds. A HELOC is as easy to misuse as a credit card is. There’s always the risk that if you don’t pay back the funds when your real estate project is done, you’ll have too many liens on your home. Treat this line of credit like a business, and pay it off once you sell or refinance a property.

If you want help figuring out which HELOC is best for you, download this free, quick HELOC questionnaire.

Read the full article here.

Watch the video here:

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How to Use Up to 100% HELOC Financing for Real Estate Investments

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How can you use a HELOC for up to 100% financing for more real estate?

Flexibility. Cheap money. Fast closings. What every real estate investor wants, and what 100% financing can give.

A home equity line of credit should be a tool in every investor’s pocket. Here’s what you need to know about 100% HELOC financing: what it is, how to best use it in your investments, and what kind you should get.

What Is a HELOC?

A HELOC is a revolving line of credit secured by a property you own – either your owner-occupied residence or a rental property.

It allows you to borrow money as needed up to a predetermined limit, which is usually based on the amount of equity you have in your home.

You only pay interest on the amount you borrow, and you can use the funds for any purpose, including real estate investing.

Why Is HELOC Financing Important for Real Estate Investors?

HELOCs are a must-have for real estate investors because they provide a quick and easy way to access funding. Whether you need to close a deal quickly or get gap funding to cover the down payment or repairs, a HELOC can help you get the job done. 

Here are 3 ways investors use HELOCs to fund their real estate deals:

Fund Any Deal You Want

If you have enough equity in your house, you could make a down payment, fund the rehab, or purchase the whole property with 100% HELOC financing.

We had a recent client find a great real estate deal in Oklahoma, where property and fix-up, all in, was $49,000. With a HELOC, that becomes an easy transaction to fund by yourself. You can skip all the trouble of going to a lender.

HELOC financing is especially useful for auction properties – you can get your funding within a day, pay for the property (or at least the down payment) all yourself, and stop missing great deals that cross your path.

Gap Funding

Another major use for a HELOC is gap funding. Gap funding supplies money for all the smaller things a primary loan or mortgage won’t cover.

You could take money from this line of credit, and use HELOC financing for:

  • Down payment
  • Repairs and rehab
  • Earnest money, if a buyer needs funds to hold a property for you 
  • Reserves, if your primary lender requires you to have a certain dollar amount on-hand for emergencies
  • Carry costs, to make loan, insurance, and other payments during the rehab

Using HELOC is the cheapest way you could fund these gaps in your loan.

Put More Down on a Property

So the third way that people use HELOCs is to put more down on a property to get better loan terms and rates.

If the bank requires another 10% more than what you have, then you can take money out of the HELOC to use. This could mean the difference between getting back financing instead of hard money or private lending.

Even if the bank doesn’t require the extra 10%, the more you can put down upfront, the more you save overall in better rates and terms.

Even if your HELOC isn’t big enough to fund an entire project, it can help you save money in smaller ways like this.

Pros & Cons of Using a HELOC for Financing

Like any financial product, there are pros and cons to using a HELOC for real estate investing. Let’s look at a few.

HELOC Financing Positives

  • Little to no fees. Sometimes, you might have to pay $100 or $200 to get a HELOC on your property, but there are usually little to no fees.
  • Lower rates. You’ll see adjustable rates or fixed rates. Depends on what you get, but a HELOC is usually cheaper than private money or hard money. Rates could even be as low as bank financing. You don’t pay interest unless you’ve taken money out.
  • Quick funding. You can fund a deal in as little as one day, giving you more control over the process. You can get the money as a wire from a bank, a check, or even a debit card connected to the line of credit.

Negatives of Using HELOC Financing

  • You must own a property. You need to own a property with equity to get a HELOC. In your owner-occupied property, most banks will go up to 95-100% of the equity. So even if you only have $20,000 in equity on your home, you can still take it out for gap funding or carry costs, even if you don’t get 100% HELOC financing.
  • You need good credit. Most banks require you to get approved through income. Both credit and debt-to-income are important factors in whether you can get a HELOC or not.
  • Misuse of funds. A HELOC is as easy to misuse as a credit card is. There’s always the risk that if you don’t pay back the funds when your real estate project is done, you’ll have too many liens on your home. Treat this line of credit like a business, and pay it off once you sell or refinance a property.

How a HELOC Works

A HELOC is like a large credit card attached to a house. You can re-use and pay off these funds over and over.

HELOC Financing vs Credit Cards

Your HELOC might function like a credit card, but it doesn’t have rates like a credit card.

Interest rates on a HELOC are around half to a third of the cost of credit card rates. HELOCs also don’t have cash limits like most credit cards. You could take your entire HELOC out in cash if you’d like, with no fee for wiring or withdrawing.

Owner-Occupied vs Rental Property HELOCs

You can also get a HELOC on multiple different properties you own. Here’s what you can generally expect as far as LTVs:

  • For a HELOC on an owner-occupied home, you can get all the way up to 95-100% of your equity available to you.
  • For a rental, the LTV caps out at 65-70% equity. You’ll have to have more equity in a rental property to make a HELOC worthwhile.

Length of the Line of Credit

A HELOC comes with a draw period. Once this period is over, they become a standard loan where you have to pay off the balance over a term just like a mortgage.

The draw period (when you can use it like a credit card) usually lasts 5-10 years.

To combat the switch to a normal loan, you can always refinance into a new HELOC. For example, you could refinance your HELOC with a five-year draw period after four and a half years. Then, you can always keep drawing on it.

Example of How a Real Estate Investor Could Use a HELOC

Let’s say you have a HELOC of $100,000. How can you use that in a real estate deal for 100% HELOC financing?

  1. You find a property you want to put under contract, so you need $2,000 for earnest money.

Instead of going to a lender or putting up your own cash, you go to your bank, have them cut you either a cashier’s check or a check on your account, put it with the title, and now you have earnest money on your account. 

You now have $98,000 available in your HELOC. You’re only paying interest on $2,000.

2. Next, you need to put in a down payment and closing costs of $10,000 total. You call your bank and have them wire it to the title company from your HELOC.

You now have $88,000 still available, and you’re paying interest on $12k.

3. Now you’re doing your projects. You need to make repairs, pay the mortgage or hard money loan, and cover taxes.

You could put a bunch of money from your HELOC in your checking account up-front, draw from it monthly, or ask your bank about a debit card. All the expenses could go on this card – you just have to keep good accounting.

Let’s say you’ve spent $30,000 total on mortgage payments, paying contractors, and other costs. This means you took $42,000 total out of your HELOC.

Note: You’re not paying interest on the full $100k limit of your HELOC. You only pay interest on the amount you’ve taken out – in this case, the $42k.

4. Lastly, you sell the property or refinance it as a BRRRR. You take these funds and put it back on your line of credit.

Now, you have $100,000 again to use on your next project.

What Kind of HELOC Should You Get?

This is the beauty of a HELOC. You’re in control. You don’t have to wait for lenders or appraisals or paperwork. You get to use the money however you need to.

HELOCs are great tools. If you have the equity, the credit, and the income, it’s vital that you find the best HELOC for you.

They come in different shapes and sizes – adjustables, fixed 5-year periods, 10-year periods. If you want help figuring out which HELOC is best for you, download this free, quick HELOC questionnaire.

Reach out at Info@TheCashFlowCompany.com with any other questions. We want our clients to get the best credit available.

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3 Ways to Use Credit Cards in Real Estate Deals

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How can credit cards help real estate investments? Here are 3 ways to use 0% cards.

Business credit cards with 0% rates can be a great entry point for new investors. Unsecured credit can fill the gaps left by your primary loan.

But how is a credit card supposed to help on a real estate investment? Let’s go through 3 ways you can use it.

1. Reserves or Down Payment on Credit Cards for Real Estate

If you have unsecured lines, or even 0% credit cards, and move the money over to accounts, then you could use those funds as reserves or a down payment.

The more money you can put in as a down payment, the better your rate, terms, and cash flow will be. Maybe funds from a credit card could allow you to put 10% rather than 5% down. This change could lower your interest rate by 1-2%.

Lenders give better rates to lower loan-to-value deals – especially for bridge loans. Take advantage of this by using unsecured credit to get more money.

2. Saving Money on Interest

Typical interest rates on credit cards are around 19-29%.

Say you put $25,000 on a 24% credit card for an investment project. Over the course of a year, that’s about $6,000 in interest. Multiply that by however many projects you complete in a year, and the costs add up fast.

0% business credit cards just make sense. With these, you can pay $0 in interest for your first year or two, rather than an astronomically high 29%.

3. Protecting Your Credit Score

When you use credit cards on your personal account, the usage negatively affects your credit score. You can’t get great loans from banks and private lenders with a bad credit score.

These 0% credit cards and other unsecured lines should be put under your business name, not your personal name. When you use an LLC, this credit usage comes off your personal credit report.

Read the full article here.

Watch the video here:

https://youtu.be/REkxzKoe6kw

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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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How to Raise Your Credit Score Fast: Usage Loan

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What’s a usage loan? And how does it raise your credit score?

Your credit card usage is reported to the three credit bureaus.

This impacts your FICO score.

Your FICO score impacts the funding and terms you can get for your real estate investments.

So what is a usage loan? Where does it come into all this?

Why Usage Matters

If you pay off your card balances before the next reporting cycle (before your next statement), then your FICO score will rise.

Disclaimer: your score will go up as long as everything else stays the same. As long as you have not taken out other credit, missed a payment, or created over negative credit issues, lowering your usage will have a 

But if you had the cash laying around to pay off these balances, you probably would have done it awhile ago. How do you bring your usage down without cash? That’s where a usage loan comes in.

What Is a Usage Loan?

It’s a loan that makes life easier and more profitable for you.

A loan to correct the usage that negatively impacts your credit score and limits your access to GOOD leverage.

More specifically, it’s a private loan that does not report to your credit bureau that you can use to pay down your credit cards, thus increasing your credit score.

It tips the lending guidelines back in your favor AND gets you better, cheaper, and easier loans.

How to Get a Usage Loan

A usage loan isn’t meant to deceive your lender. You still have to let lenders know you have this debt.

If your debt was on a business card where they belong, it wouldn’t count against your personal credit. What a usage loan does is give your credit score a leg-up to get you the best funding you deserve. 

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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