I’m new to the whole business credit thing. Is there a strategy for purchasing real estate using business credit. Is it cheaper or easier to use business credit vs. a regular mortgage? Fill me in, I wanna make money too!! :help
I BELIEVE World savings used to loan on an EIN Number. It seems there guidelines chane daily.
World savings does indeed loan as a business however there standards are high. You must have a dunn and bradstreet file that is 3 years old and they want copies of EVERYTHING it seems. This was the case when I used them last year.
Chris
Hi Craig,
There is a whole world of things to write about using corporate credit.
I see that you’re in the San Fernando Valley. Last week I met with the president of a new bank in Santa Ana that was a business bank.
They don’t have any specific requirements, but want to make sure their loans make sense.
It also depends where you’re investing. If you’re investing in some of the low priced markets, you can start to use corporate credit by opening corporate credit cards and using them to purchase and rehab properties. If you’re investing at home, this probably won’t be possible right off.
In general, business loans are more expensive than loans to individuals.
Anyway, give me a little more of an idea of what you’re looking to accomplish and I’ll see if I can point you in the right direction.
Have an awesome night!
Stacy
Rehab and long term buy and hold is what I am looking for…yes I’ve read about how to establish an entity and build corporate credit using CCs and eventually LOCs…but is this only good for Rehabs… will this new bank do long term buy and hold for good investments without a personal gaurantee?
Hi Craig,
In general, it is rare that a bank will lend to an LLC without a personal guarantee.
It’s not unheard of. The loan would be a called a “non-recourse” loan, meaning the only recourse they have upon default is to take the property back, rather than the traditional taking back the property and taking down the borrower’s credit.
Where it will become more likely is when your LLC has a significant credit history and can truly stand on its own two feet. In the mean time, the best chance of starting to get end loans within the name of the LLC (with you as the personal guarantor still) is to work with local banks in the area where the property is located.
Local banks are far more open to being flexible with terms and with lending criteria than the “big banks” are.
I’d suggest picking three local community or local commercial banks, ask to speak with their commercial loan officer and ask what programs they have available for real estate investors. Let THEM sell YOU on why they should be your bank of choice.
In the course of the conversation, find out what they’re lending criteria is so you can put together the most compelling presentation possible.
Stacy
So you should shop for a loan in the area you are investing in, or the area you live in?
Hi Craig,
Until recently I would have told you to speak to banks in the area where the house is located, but I was recently surprised when a visit to a Santa Ana bank yielded a comment that although they have to focus on the Orange County area, technically they can loan anywhere.
I think you’ll find it easier to work with a bank in the area where the property is located.
Stacy
Tell you what I’ve found. A good resource is Thomas Kish, who does happen to sell a course on the subject, and I bought it. It has helped a bunch. Bottom line is that you should start a new business entity, probably an LLC, probably in Wyoming or Nevada. I chose WYO. You can do this for about $200.00. You then go to the IRS and get an EIN (employee ident. number).
Once you’ve gotten your LLC, you will begin to be contacted by banks who want to loan to new businesses, and will offer you credit cards. You have to guarantee the cards, but the credit goes strictly against your LLC, and not your personal.
I found that I had much better success sending in the pre-approved letters from the banks to my LLC, rather than sending in an unsolicited application–like World Bank, or whoever. Hope this helps.
Gary
Stacy - sorry for reviving this old thread… but your comment above made me think…
Right now I am putting together a business plan presentation that I am planning to take to some local banks to see if they would be willing to financing my real estate investments. The basic idea is to show them my business plan (I have already created one), including my financial plan/cash flow, the area where I am planning to invest, what I am planning to do with the properties, etc… etc…
Your comment made me think - is it better to go to the bank first and ask for their programs/criteria before I put together my presentation? I thought I had to have my documents ready to present to them and show that I am serious during my first meeting. Can you elaborate a little bit on your strategy?
Thank you. :O)
Hi j1dias I am interested in putting a real estate investing business plan together but not sure where to start.
I would like to buy long term rental properties that are cashflow positive right off the bat. I currently own one condo near a prestigious university in St. Louis. The response/conversion rate is awesome using only Craigslist ads for getting tenants.
I spent my life savings on the 20% down payment for the one condo but I know there is potential in this area for more investments.
If you don’t mind sharing, what is your real estate investing business plan all about and how much money are you trying to raise? I’d like to raise about half a million dollars to invest in a few nice condos.
Hi Stu_Ashby - nice meeting you.
My business plan is much simpler than what you are trying to do. I am also interested in building a rental business. But I am starting very small - one property at a time. I am right now considering my first potential deal. I learned a lot in this forum from more experienced investors.
One book that I recommend is the “1 Minute to Rental Property Riches” written by Michael Rossi (propertymanager in this forum). I bought it few weeks ago and I learned a lot from it. Mike started a rental business few years ago and he gives advice on how to build your own business. He even shares his business plan in the book. I used it as a starting point to build my own.
Right now I am putting together a Loan Package to take to the bank to see if they would finance my first deal - a property I found this past weekend that I believe has a lot of potential.
If you want I can send you a copy of my plan. Just PM me…
Thank you and good luck!
Hi gary.micheloni:
I have serveral questions:
(1) Could you explain more about the Thomas Kish resource?
(2) U mentioned to gypsydog to start a new LLC company in Wyoming or Nevada? Why, and what are the benefits?
(3) If you start your LLC Company in Wyoming or Nevada, wouldn’t it be conflict that your LLC Company is in Wyoming or Nevada while you’re buying properties in your own state and not in Wyoming or Nevada?
(4) What are the steps to start a new LLC Company in Wyoming or Nevada? Is there a website for Wyoming or Nevada to set up a new LLC Company?
These are just some of my questions, and thanks in advance for your help.
U have a nice day,
ruukie :biggrin