Tag Archive for: The Cash Flow Company

How Personal Credit Scores Impact Business Loan Approval

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Today we are going to discuss how personal credit scores impact business loan approval. Did you know your personal credit score plays a big role when you apply for a business loan? Lenders often check it to decide if they’ll approve your loan and set your interest rate. Even though the loan is for your business, your credit score shows how well you manage money, and lenders care about that.

Example

For example, imagine two business owners. One has a credit score of 750, and the other has a score of 620. The owner with the higher score will likely get better loan terms. Why? A higher score shows lenders you’re less risky, which gives them confidence you’ll repay the loan.

Improving your scores

However, don’t worry if your score isn’t perfect. There are ways to improve it. Start by paying down credit card balances, paying bills on time, and avoiding too many credit inquiries. These small actions can boost your score and open more loan options.

Business focus

Also, some loans focus more on your business finances. For instance, a DSCR loan (Debt Service Coverage Ratio loan) looks at the income from your property rather than your credit score. This is helpful if your personal credit score needs work.

Set yourself up for success

In short, your personal credit score matters, but it’s not the only thing lenders look at. By improving your score and exploring options, you can find the right loan for your needs. Keep moving forward, better loan opportunities are within reach!

Contact Us Today! 

Not sure how personal credit scores impact business loan approval? Contact us today to find out more about credit score mistakes and how you can get back on track.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist to see if your credit score is in the right place for your investment needs.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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The Risk of Using Personal Credit Cards for Business Expenses

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Today we are going to discuss the risk of using personal credit cards for business expenses. Using personal credit cards for your business might seem easy, but it can cause big problems later.

Harder to track

First, mixing personal and business expenses makes it harder to track spending. Imagine trying to figure out how much you spent on supplies versus groceries when tax time rolls around—it’s a headache you don’t want.

Impact on your credit score

Second, maxing out your personal credit cards can hurt your credit score. For example, if you’re using most of your available credit to cover business costs, your score could drop. This might make it harder to qualify for loans when you need them most.

Lower spending limits

Third, personal credit cards often come with lower spending limits than business cards. If you’re growing your business, you could hit your limit fast. For instance, buying equipment or stocking up on inventory might leave no room for emergencies.

Protect yourself

Lastly, personal credit cards don’t always protect you legally. If something goes wrong with your business, you could be on the hook personally for debts. A separate business card helps protect your personal finances.

Open a business credit card today

Instead of relying on personal cards, consider opening a business credit card or line of credit. These options often come with perks, like higher limits and better rewards. Plus, keeping your expenses separate makes bookkeeping and taxes so much easier.

Contact Us Today! 

Not sure where to start? Contact us today to find out more about the risk of using personal credit cards for business expenses.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist to see if your credit score is in the right place for your investment needs.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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The Biggest Mistake Real Estate Investors Make

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Today we are going to discuss the biggest mistake real estate investors make! Real estate investing can be rewarding, however it also comes with challenges. One of the biggest mistakes investors make is not being “money ready.” To clarify, this lack of preparation can lead to delays, added costs, as well as a reductions in profits. Let’s break this down and look at examples in order to understand why being money ready is essential.

What Does “Money Ready” Mean?

Being money ready means having enough funds available to cover the full scope of a project. This includes:

  • Purchase price
  • Rehab costs
  • Carry costs (taxes, insurance, interest payments)
  • Unexpected expenses

It’s not just about having cash in the bank. You need accessible funds like credit lines, reliable backup resources, or supportive partners.

The Tale of Two Investors

Here’s a real-world example of how being money ready can either make or break a project.

Investor #1: Money Ready and Profitable

Investor #1 planned their project meticulously:

  • ARV (After Repair Value): $400,000
  • Expected Profit: 15% or $60,000
  • Timeline: 6 months, from purchase to sale

They encountered an unexpected $7,500 expense during the rehab (such as old wiring or plumbing behind a wall). Because they had funds readily available, they handled the issue immediately as well as kept their contractors on schedule. As a result, they finished the project a month early, saving additional carry costs.

  • Final Profit: $55,000
  • Project Duration: 5 months

Investor #2: Unprepared and Stressed

Investor #2 started with the same expectations but wasn’t money ready. When the same $7,500 unexpected expense came up, they had to scramble for funding. This delay caused:

  • Contractors to move on to other jobs, creating scheduling issues.
  • A project timeline extension of 4 additional months.
  • Extra carry costs of $12,000 ($3,000 per month for taxes, insurance, and interest).

To make matters worse, the slower timeline also pushed the project into a weaker selling season. They had to drop their price by 5% ($20,000) to attract a buyer. Additionally, their lender charged a $5,000 extension fee for going beyond the loan’s 9-month term.

  • Final Profit: $15,000
  • Project Duration: 10 months

Why Money Readiness Matters

Delays as well as unexpected costs are common in real estate investing. Without enough funds to handle surprises, you risk:

  • Missing optimal market windows (like spring or fall selling seasons).
  • Losing profits to prolonged carry costs and price drops.
  • Increased stress from juggling financing and contractor schedules.

How to Get Money Ready

To avoid these pitfalls, aim to have 20-40% of the total project budget available in accessible funds. These funds can come from:

  • Savings
  • Lines of credit
  • Credit cards (used strategically)
  • Supportive partners

For example, if your project’s total budget is $300,000, plan to have $60,000 to $120,000 in accessible funds. This cushion ensures you’re prepared for any hiccups without derailing the project.

The Cost of Not Being Ready

Let’s revisit Investor #2’s project:

  • Unexpected Expense: $7,500
  • Additional Carry Costs: $12,000 (4 extra months)
  • Price Drop: $20,000 (5% of $400,000)
  • Extension Fee: $5,000

Their original $60,000 profit dwindled to just $15,000, a $45,000 difference. Meanwhile, Investor #1 stayed on track, kept stress low, and moved on to their next profitable deal.

Speed Is the Name of the Game

In real estate, speed matters. The faster you:

  1. Close on a property, the better your deal.
  2. Complete the rehab, the more you save on carry costs.
  3. Sell in the right market window, the higher your profits.

But speed is only possible when you’re money ready.

Don’t Make This Mistake

Being money ready sets successful investors apart from those who struggle. If you want to avoid this common mistake, take the time to plan your funding properly. It’s the key to:

  • Keeping stress low
  • Maximizing profits
  • Growing your real estate business

Make sure you have the resources you need to handle surprises. That preparation will keep you on track, no matter what challenges arise.

Contact us today to learn more about the biggest mistake real estate investors make!

Watch our most recent video to find out more.

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How to Calculate Your DSCR Ratio

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Today we are going to discuss how to calculate your DSCR ratio. Understanding your DSCR (Debt Service Coverage Ratio) is key for any real estate investor. This number shows if your property makes enough income to cover its debt payments. Lenders use it to see if your investment is a smart bet. Luckily, calculating it is simple.

Here’s the formula:

DSCR = Net Operating Income (NOI) ÷ Total Debt Payments

Start with your property’s NOI. This is all the income it brings in, minus operating expenses like maintenance, property management, and taxes. For example, if your rental brings in $2,500 monthly and expenses are $500, your NOI is $2,000.

Next, add up your debt payments. This includes your monthly mortgage, insurance, and other loan costs. If these total $1,800, your DSCR is:
$2,000 ÷ $1,800 = 1.11

A DSCR over 1.0 means the property earns enough to cover its debts. Lenders often like to see 1.2 or higher, but it depends on the loan type.

Why does it matter?

Why does this matter? If your DSCR is too low, it might mean you’ll struggle to pay your bills. But a high DSCR shows lenders that you’re a safe bet.

By knowing your DSCR, you can plan smarter. For example, if your DSCR is tight, you might look at lowering expenses or finding a property with stronger cash flow.

So, run the numbers. It’s a small step that helps you, and your lender, see the big picture.

Contact Us Today! 

Do you need help learning how to calculate your DSCR ratio? Contact us today to find out more about DSCR loans!

Free Tools For You! 

We also have free tools available! Download the DSCR Quick Calculator to see if a DSCR loan is the best option for your investment properties! 

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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How Interest Rates Will Impact Rentals in 2025

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Today we will be discussing how interest rates will impact rentals in 2025. Real estate investors always have one eye on the market and the other on their financing. With 2025 just around the corner, it’s time to discuss how changing interest rates can affect your rental properties. Being prepared isn’t just about understanding the rates, it’s about having the right strategies and resources in place.

Let’s dive into what to expect, how to plan, and how to keep your investments profitable.

What Higher Interest Rates Mean for Rentals

When interest rates go up, borrowing costs rise too. For investors, this means higher monthly payments for mortgages or loans, which can shrink your rental income.

Here’s a simple example:

  • If your loan balance is $200,000 at 5%, your monthly interest payment is $833.
  • At 7%, that payment jumps to $1,166—a $333 increase per month!

Multiply that by a year, and suddenly, your rental profit margins are much tighter.

The Tale of Two Investors

Higher interest rates don’t affect everyone the same way. Here’s a story to show the difference between being prepared and being caught off guard.

Investor 1: Money Ready and Prepared
Investor 1 had a rental property worth $400,000 with a 15% profit goal of $60,000. They planned carefully, budgeting for all costs and unexpected expenses like taxes, insurance, and maintenance. Even when costs rose, they had reserves ready.

The result? They completed the project on time, stayed within budget, and walked away with $55,000 in profit, just $5,000 short of their goal.

Investor 2: Unprepared for the Costs
Investor 2 aimed for the same $60,000 profit but didn’t budget for surprises. When unplanned expenses hit, like a $7,500 repair, they scrambled to find funds. This delay caused contractors to move on to other jobs, adding weeks to their timeline.

By the end of the project, Investor 2 faced extra interest, taxes, and insurance costs. They even had to drop the price by 5%, losing an additional $20,000. Their final profit? Just $15,000, and months of unnecessary stress.

What Can You Do to Stay Profitable?

Planning is key to thriving in a market with rising interest rates. Here are three steps to help you stay ahead:

  1. Know Your Costs
    Create a detailed budget for every rental property. Include purchase price, rehab costs, carrying costs, and a cushion for unexpected expenses.
  2. Be Money Ready
    Have at least 20–40% of your project’s total budget available in reserves. This can include savings, lines of credit, or trusted partners who can step in if needed.
  3. Move Quickly
    Delays are costly. Stick to your schedule and keep contractors on track. The faster you finish a project, the less you’ll spend on carrying costs.

How 2025 Could Work in Your Favor

While rising rates sound scary, they can create opportunities for prepared investors. Less competition from underfunded investors means more deals for those who are ready. Plus, rents often increase when interest rates rise, helping offset higher borrowing costs.

For example:

  • If a rental property’s monthly mortgage payment goes up by $300 due to higher rates, raising the rent by $150–200 per unit can bridge the gap while still remaining competitive.

Set Up Your Money Buckets

One of the best ways to prepare is by having your “money buckets” ready. This means having funds available for:

  • Down payments
  • Unexpected repairs
  • Holding costs (taxes, insurance, and HOA fees)

If you’re unsure how to get your buckets in order, we’re here to help. We can guide you through setting up reserves and finding the right lenders for your goals.

Speed Is the Name of the Game

In 2025, speed will matter more than ever. The faster you close deals and finish projects, the better your chances of staying profitable. Remember, delays can eat away at profits, so being prepared will keep you ahead of the curve.

Get Help So You Don’t Make Costly Mistakes

At the end of the day, preparation is the difference between enjoying rental income and stressing over every expense. If you want to stay on track and maximize your profits, reach out to us. We can help you build the right plan, so you can:

  • Profit more
  • Stress less
  • Enjoy investing in real estate!

By following these steps, you’ll be ready to tackle 2025 with confidence, no matter how interest rates shift.

Contact us today and watch our most recent video to find out more about: How Interest Rates Will Impact Rentals in 2025

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Starting Your Small Business Correctly

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Today we are going to discuss the importance of starting your small business correctly. Starting a small business can be exciting, but it’s important to set it up right from the start.

Choose your business

First, make sure to choose the right business structure. Whether it’s an LLC, corporation, or sole proprietorship, this decision impacts your taxes and legal protection. For instance, an LLC might work best for real estate investors because it protects personal assets if something goes wrong.

Create a plan

Next, don’t skip creating a solid business plan. A plan helps you stay focused and gives lenders confidence if you need funding. For example, outlining how your business will grow or generate income makes it easier to secure a loan.

Get everything in order

Additionally, register your business and get all the proper permits. Skipping this step can lead to fines or delays. For example, a house flipper might need a local business license to operate legally.

Setting yourself up for success

After that, set up a separate business bank account. Keeping your business and personal finances separate makes it easier to track expenses and file taxes. For instance, if you’re managing multiple rental properties, mixing accounts can get messy fast.

Credit is key

Finally, focus on building your credit. A strong business credit profile opens doors to better loan terms. Paying bills on time and keeping credit usage low helps build trust with lenders.

Get started today

By taking these steps, you can avoid common pitfalls and set your business up for success. Plus, it’s easier to adjust and grow when your foundation is solid. Start right, and your small business will have a big chance to thrive.

Contact Us Today! 

How can you maximize your profits as a small business owner? Contact us today to find out more!

Free Tools For You! 

We also have free tools available! Download the 5 ways to start a biz with no money to see if your potential rental property is going to be a good investment!

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can maximize your profits! 

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The Importance of Leverage in Real Estate Investing

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Today we are going to discuss the importance of leverage in real estate investing. Leverage is a game-changer in real estate investing. It’s what allows you to grow your portfolio faster without needing stacks of cash. Think of it like using a small lever to lift a big rock. With the right tool and technique, you can do a lot with a little.

Here’s an example: imagine you want to buy a $200,000 rental property. Instead of paying the full amount, you use leverage, a loan, to cover most of it. You put down $40,000 and borrow the rest. The rent from the property pays the loan, and you still build equity as the property’s value increases.

Leverage isn’t just about getting more properties. It’s about creating opportunities. You can use it to renovate a fixer-upper, buy into a growing market, or even free up cash for other investments.

But here’s the key: leverage works best when used wisely. Taking on too much debt or ignoring the numbers can backfire. It’s like riding a bike downhill, exciting, but you need control.

With smart planning, leverage can help you grow wealth while keeping your money working for you. It’s a powerful tool for anyone serious about real estate. Want to dive deeper? Explore money buckets more on our website! 

Contact Us Today! 

How can you maximize your profits as a real estate investor? Contact us today to find out more about the importance of leverage in real estate investing!

Free Tools For You! 

We also have free tools available! Download the Your Money Buckets to make sure that you have the leverage you need to succeed.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can maximize your profits! 

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How Can Business Credit Cards Help Your Credit Score?

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Did you know that business credit cards can help your credit score? It might sound surprising, but these cards can play a big role in building your credit when used the right way. Let’s break it down.

For starters, business credit cards often don’t report spending to your personal credit unless you miss payments. This means you can keep your personal credit utilization low, which is a big factor in your credit score. For example, if your personal card is maxed out for a home project, using a business card instead can keep your credit healthy.

Another perk? On-time payments. Just like personal credit cards, paying your business card on time shows lenders you’re reliable. Over time, this good habit adds positive marks to your credit history.

Lastly, opening a business credit card adds to your available credit. Let’s say you have a $10,000 limit across your personal cards. If you get a business card with a $5,000 limit, your total credit jumps to $15,000. This lowers your credit utilization percentage, which can bump up your score.

With these benefits, business credit cards can be a smart tool to build and protect your credit. But remember, like all credit tools, they work best when handled with care. Ready to dive deeper? Give us a call to see how business credit cards can set you up for success!

Contact Us Today! 

Not sure where to start? Contact us today to find out more about how business credit cards can help your credit score.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist to see if your credit score is in the right place for your investment needs.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

 

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How Interest Rates Will Impact Fix and Flips in 2025

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Today we are going to discuss how interest rates will impact fix and flips in 2025!  Let’s dive into what this means for you and how to set yourself up for success.

Why Timing and Funding Matter

Timing is everything in real estate. Selling at the right time, like early spring or late summer, can maximize your profits. Missing these windows? That can add months of carrying costs, extra stress, and potentially reduced profits.

But timing isn’t the only factor—your funding strategy plays a huge role. Having the right money bucket ensures you’re ready for surprises without slowing down your project.

What Happens Without Proper Funding?

One of the most common mistakes we see is when investors aren’t money ready. Let’s look at an example:

  • Investor A had everything planned. The property was supposed to take 6 months from start to sale. But halfway through, they found $7,500 in unexpected repairs—old wiring and copper plumbing. Since they didn’t have enough reserves, they scrambled for funds.
  • This caused delays. Subcontractors moved on to other jobs, pushing the project back 4-6 weeks. By the time Investor A finished, they were 4 months behind and had to pay $12,000 in extra carrying costs. On top of that, they had to drop the price by 5%, losing $20,000.
  • In the end, their $60,000 profit shrank to just $15,000—and their stress levels went through the roof!

The Tale of Two Investors

Let’s compare Investor A with someone who was prepared.

  • Investor B also faced the $7,500 surprise but had their funding ready. They covered the cost immediately, keeping their project on schedule.
  • Investor B finished in 5 months, saving an extra month of holding costs. Despite the unexpected expense, they still walked away with $55,000 in profit.

What’s the difference? Speed and preparation. Being money ready made all the difference for Investor B.

How Interest Rates Will Impact Your Deals in 2025

Higher rates increase borrowing costs, so every delay becomes even more expensive. Here’s why:

  1. Larger Monthly Payments: Each month you hold the property costs more. Taxes, insurance, and interest can eat into profits fast.
  2. Extension Fees: Lenders often charge hefty fees if your project goes past its original term. For example, a 2% extension on a $250,000 loan adds $5,000 in unexpected costs.
  3. Price Adjustments: Slower markets due to higher rates may force you to drop prices to sell quickly.

Steps to Succeed in 2025

  1. Build Your Money Bucket: Plan to have 20-40% of your total budget in accessible funds. This includes reserves for unexpected costs, payments, and project overruns.
  2. Stick to a Fast Schedule: The faster you complete your project, the less you’ll spend on carrying costs.
  3. Partner with Reliable Lenders: Work with lenders who understand the challenges of fix-and-flip investing.

Get Help So You Don’t Make This Mistake

2025 will bring challenges for fix-and-flip investors, but preparation is key. Want help setting up your money buckets or finding the right funding options? Reach out to us!

Let’s ensure you’re ready to profit faster, stress less, and enjoy real estate investing in the coming year.

Wrap-Up

Speed and preparation are your best friends in a fix-and-flip project, especially when interest rates are high. The more prepared you are, the more successful you’ll be.

If you have questions or want to learn more, contact us today and check out our programs. We’re here to help you thrive in 2025 and beyond!

Watch our most recent video to find out more about: How Interest Rates Will Impact Fix and Flips in 2025!

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What Are Interest-Only Loans?

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Interest-only loans are a unique way to borrow money, especially for real estate investors or homebuyers looking for flexibility. With these loans, you pay just the interest for a set period, usually 5 to 10 years, before switching to payments that include both principal and interest.

Why would someone want this? Imagine you’re flipping a property. You plan to renovate and sell it quickly. An interest-only loan keeps your monthly payments low, freeing up cash for the project. Or maybe you’re renting out a property. Lower payments can help you maximize cash flow in the early years while you build equity.

For example, let’s say you borrow $200,000 with a 6% interest-only loan. Your monthly payment would be just $1,000 (6% of $200,000 divided by 12 months). Compare that to a traditional loan with principal and interest, your payment could be $1,200 or more. Those savings can make a big difference when every dollar counts.

But, there’s a catch. After the interest-only period ends, your payments will go up, sometimes a lot. That’s why it’s important to have a solid plan for what comes next.

Interest-only loans aren’t for everyone, but when used wisely, they can be a great tool to reach your goals. Want to know if this type of loan fits your situation? Keep reading for the pros, cons, and how to decide.

Contact Us Today! 

Is a cash out refinance right for you? Contact us today to find out more and learn about your different financing options.

Free Tools For You! 

We also have free tools available! Download the Loan Optimizer what financing would be best for your investment property.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

 

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