Tag Archive for: The Cash Flow Company

Starting Strong: The First 4 Steps for New Real Estate Investors

How do you set your company up to win? As a new investor, there are 4 steps that new real estate investors should take. These steps will not only set you up correctly for lending, but they will also protect you in the future. As we’ve discussed before, real estate is all about money and leverage. Consequently, businesses that are not set up as an LLC or company, will not be approved for a commercial loan. By establishing your business correctly from the beginning, you will in turn set yourself up to win. So what are the four steps that a new investor should take? Let’s take a closer look!

First, Set up your business name

It is imperative that you select a business name that represents your company, and that your name is available within your state. Something to remember when selecting a business name is to not include real estate terms within the name itself. In looking into the lending world, about ⅓ of lenders find it unfavorable if you include “real estate”, “fix and flip”, or other real estate terms within the business name. To get started, go to the Secretary of State page for your specific state.  Then select the business tab, and finally locate the link to search name availability. After you have researched name availability, it is important to register your business name with your state to make it official. 

Second, Set up an EIN

Once you have successfully selected and registered your business name with the Secretary of State, it is helpful to talk with your accountant or lawyer. They can help to guide you through the process of setting things up correctly not only for your state, but for the IRS as well. Businesses need to apply for an EIN in order to open business accounts. The EIN is the federal employer identification number for business owners. It’s like a social security number for your business. This can be set up directly through the IRS website.

Third, Set up your bank account

The next step that you should take as a new investor is setting up a business bank account. It is important to set up business bank accounts as soon as possible to begin separating personal and business expenses. Lenders will often look at what you have in your bank account to assess your financial stability. By separating personal and business accounts, it can make the underwriting process go faster.

Fourth, Make yourself known

After you are correctly established as a business, it is important to make yourself known! By creating a website, securing an office space, and filing with 411, businesses can obtain a greater client base. Completing this process within the first year of forming your business, further establishes your presence within the community.

In Conclusion

As a new investor it can be overwhelming. In order to win, it’s vital that you set up your business correctly from day one. We can get you started by providing a step by step resource guide for new business owners. This guide is state specific and includes direct links that will get you on the fast track to success.

Watch our most recent video to find out more about The First 4 Steps for New Real Estate Investors

Do you have more questions about setting your business correctly? Do you need additional information regarding lending options or business credit cards? Contact us today!

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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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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

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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This is the #1 Roadblock in Real Estate Investing

It is incredibly easy to get burnt out as a real estate investor. However, by knowing the roadblocks ahead of time, you can avoid many of the common mistakes. Real estate investing, unlike other businesses, relies heavily on leverage and funding. Almost everything we do from buying and holding rentals, to doing flips, and even dividing land, it is all heavily dependent on funding. Money from banks, private lenders, or even other people’s money, are vital to your success. So what’s the #1 roadblock in real estate investing? The answer is not understanding your cash flow and not knowing the numbers ahead of time.

Rushing to obtain generational wealth

Unfortunately, people go to conferences and get hyped up to make generational wealth in a short period of time. While you need emotions to guide your business, it is important to take a step back and know your numbers before diving in. Generational wealth is difficult to achieve in a three month period, however a three year timeline is feasible. By not rushing into investment opportunities, it allows you to form a game plan for success.

Understanding all of your expenses

This week we had a person contact us who didn’t understand how escrow worked, thus creating further financial strain for the client. Escrow can be very confusing for investors. This is a portion of the loan that a lending company puts aside for repairs to the property. Many people do not fully understand how much money is needed up front in order to start the construction process. In addition, many underestimate how much the interest will be every month for the property. If you have a $400K loan, and you’re at 12%, you will in turn pay $4K a month out of your pocket. Thankfully the title company provides a settlement statement that includes a complete breakdown showing exactly what you are buying, and what you owe to everyone. By fully understanding your budget and planning for expenses, you can avoid spiraling debilitating debt. 

Do your research and plan ahead

Investors who do not know their numbers will soon find themselves in a spiral of financial distress.  Not only that, but by not having enough money to make payments it will result in pure panic and overwhelming desperation. Many investors attempt to resolve this crisis by using personal credit cards, or a HELOC to get back on track. In doing so, they put their whole life into jeopardy. People can make a lot of money at this, and there is a lot of money to be made. It is imperative that you know your numbers, take emotions out, and do your research before diving in. People tend to overestimate what they can do in a few months, and tend to underestimate what they can do in a few years. 

Watch our most recent video to find out more about the #1 Roadblock in Real Estate Investing.

Want more information on real estate investment roadblocks or have any other questions? Contact us today! 

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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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Take the Fast Track: #1 Lesson I’ve Learned in Real Estate Investing

Over the past 23 years, I’ve helped thousands of people navigate and conquer real estate investing. Looking back, there are a number of things that I would do differently to not only simplify the process but put me on the fast track as well. While there are five valuable lessons, I would like to share with you, one in particular will make a significant impact on your real estate investing venture.

How to Take the fast track

Don’t try to reinvent the wheel! Find systems and people who have worked hard and copy them. Look at what they are doing, what their systems are, and what they are looking for, as well as what they are avoiding. Discover exactly how to win by exploring what makes sense for your investments and what doesn’t. There is so much noise out there! You want to make sure that you are watching the people who are doing great and ignore those who are just talking about doing good. Here are the top three things that you need to get on the fast track!

Properties:

A valuable lesson that every fast-track investor needs to learn is how to find good properties. Find and look at as many good properties as you can.

Funding:

The most important thing as a real estate investor is leverage and using other people’s money. Funding is available through banks, lenders, or individuals.

Put together a good team:

It is vital that you partner with good contractors, knowledgeable realtors, stagers, and property managers. By putting the whole team together, they can support you by knowing what you are looking for as well as what they can or can’t do.

How can we help you?

Our goal is to make you successful! There is no need to start from scratch and struggle along the way. By researching and following what others have done, you can quickly and easily set your business up to win. 

Watch our most recent video to find out more about these 5 valuable lessons. 

Have more questions on how to get started with your business and how you can win in real estate investing? Call us today

 

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Credit Score 911 How to Qualify for a Utilization Loan

A utilization loan, or 911 utilization loan is useful for both flippers, as well as real estate investors. Unfortunately, not everyone can qualify for a 911 loan, but it is available to those who pay their bills on time and need to quickly raise their credit score. Many of the clients we see get stuck in the trap of using their personal credit cards for business expenses. This in turn can have a significant impact on credit scores in the long run. There are three things that we look for to determine if you qualify for a utilization loan. Let’s take a closer look!

First, make sure payments are on time.

This loan is ideal for clients who spiral into personal credit card debt from using their cards for business expenses. The most important requirement to qualify is that they have been paying on time every month. If you haven’t been paying on time, then you will need to get back on track in order to be considered.

Second, have something to secure the loan with.

We are an asset-based lender and require a piece of real estate to secure the loan. We want to not only ensure that we have the security for lending, but that you also have leverage for your next step.

Third, how do you pay a usage loan back.

In using the 911 loan, you are able to increase your credit score. Which, in turn, allows you to get your next loan, qualify for a refinance, purchase your next flip property, and so much more! However, it is important that you think ahead about how to pay off this usage loan once you get back on track. This can be done by either getting cash out or using a HELOC to pay us off. 

Is a usage loan right for you?

We have a client for example with 200K in credit card debt who is paying 6-7K per month now. By doing the 911 loan, we were able to cut their debt in half to 3K per month in credit card payments. Another client was able to raise their credit score 12 points and receive a HELOC. While someone else was finally able to qualify for a SBA loan. Again, this is not a long-term loan! This is a 911 loan that will help get your credit score back on track and provide the leverage you need to be successful.

How can we help you?

Not sure if you would qualify for a credit utilization loan or where to go next? We have resources that can help guide you through the process. It only takes about 10 to 15 minutes to run through the information and see if we can help. After that, we will also help to set things up correctly to ensure you aren’t faced with these issues again. 

Before reaching out, there are a few things you can do to see if this is the right move for you and your business. 

  1. Go to MyCredit, MyFico or another credit website to run a simulator. This will show how your credit score is impacted once you pay off certain debt.
  2. Look at your payments and leverage. Are you paying everything on time, and do you have a real estate property that can be used to secure the loan?
  3. How can you get out of it in less than 12 months? You need to have a way to pay off the 911 loan in a short period of time. 

These are good loans for real estate investors who are trying to get credit card payments paid down. So many people go into credit card debt, and it can take a year or two to recover by paying them off as they build. It’s easier however, to pay 8-10% interest on a HELOC then 29% interest on a credit card. 

Watch our most recent video or contact us today to see if you qualify for this quick fix, so you can enjoy investing in the future! 

Go to our website to fill out an app and set up an appointment to discuss more. The more information you can give us, the more we can do to get you back on track! 

 

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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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5 Valuable Lessons Learned in Real Estate Investing 

In the past 23 years, I’ve helped thousands of people become successful in real estate investing. Looking back over those years, there are several things that I would do differently to not only make me successful but also, ways to do it quicker. There are 5 valuable lessons that I’ve learned and want to share with you about real estate investing.

1. Take the fast track

Don’t try to reinvent the wheel! Find systems and people who have worked hard and copy them. Look at what they are doing, what their systems are, and what they are looking for, as well as what they are avoiding. Discover exactly how to win by exploring what makes sense for your investments and what doesn’t. There is so much noise out there! You want to make sure that you are watching the people who are doing great and ignore those who are just talking about doing good. Here are the top three things that you need to get on the fast track!

Properties:

A valuable lesson that every fast-track investor needs to learn is how to find good properties. Find and look at as many good properties as you can.

Funding:

The most important thing as a real estate investor is leverage and using other people’s money. Funding is available through banks, lenders, or individuals.

Put together a good team:

It is vital that you partner with good contractors, knowledgeable realtors, stagers, and property managers. By putting the whole team together, they can support you by knowing what you are looking for as well as what they can or can’t do.

2. Times VS Time

The question that all investors ask is, how long does it take to be successful? Success is heavily reliant on the number of times you practice evaluating properties, as well as exploring your lending options. The more you practice and look at properties, practice and comp out a property, and reach out to lenders, the more knowledgeable and confident you will become. It takes 100 times to walk through these steps before an investor becomes confident in the process. Some investors can achieve this in a week, while others may take 6 months to 6 years. Again, it’s not the amount of time it takes to be successful, it’s the number of times you practice.

3. Set your business up to win 

You must set up your business correctly from the beginning. To do this, make sure that your business is properly set up with the state, has a bank account, and has an office location. Every correct step will ensure that the business is set up to win the leverage game. One of the most important steps in this process is selecting your business name. Avoid putting “real estate” directly in your name because it will impact your funding moving forward. Instead, you can use “management”, a name, or a group in order to make your business name unique.  Once everything is established, find local banks that love to work with real estate investors. While national banks are great for unsecured lines of credit and credit cards, it is the local banks who will partner with you long term.

4. Create simple processes

Investors can easily become overwhelmed by all of the components that need to be considered before purchasing a property. By walking through the steps over and over again, it makes it easier to not only set up a simple process for yourself but then allows you to hand things over to others. Begin to find people who can support you and follow your established processes. You must ask yourself:

  • How do I comp out a property?
  • How do I walk through a property to see what needs to be fixed or repaired?
  • How do I pick a contractor?

5. Scale with flexibility

To add volume to your investments, you must bring in more people. However, these individuals are not on the payroll. More importantly, their partnership and expertise can guide you on the fast track to success. From having real estate agents help comp out properties, to bringing in more wholesalers, this can help you win with flexibility with your scalability. As long as you have your systems established, there is no ceiling to your success.

Bonus

6. Do whatever it takes

You must do whatever it takes to get you to where you want to be. Only you can determine what that means to you. Identify what you need to do upfront, and just do it! If you get into that mentality, you will be able to navigate the road to success within your market. The people who have the “do whatever it takes” attitude will not only win in this market but in every market thereafter!

Our goal is to make you successful! By following these 5 valuable lessons in real estate investing, you will be on the fast track to success! Watch our most recent video to find out more about these 5 valuable lessons. 

Have more questions on how to get started with your business and how you can win in real estate investing? Call us today

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