Do you find yourself in a Catch 22 concerning your real estate endeavors?
You want private money to close on real estate investing deals, but you need to close on real estate investing deals to attract private money. People who are just getting started in real estate investing have a hard time attracting private money, simply because private money lenders don’t want to invest in newbies because the loan is secured by a note and a deed of trust.
From a private moneylender’s perspective, they don’t want to lend out money for someone to experiment with it, and that’s understandable.
Once you have several properties in your portfolio, you’ll be setting yourself up in a position to attract people who will want to work with you. Especially once they become aware of your good track record and start seeing you as successful.
Until then, what are you to do for funding? Well, an alternative option is Business Credit Cards. The way these cards work is with a personal guarantee. You have to understand that lenders typically look at how new you are to the business. It doesn’t matter to them whether or not you incorporated yesterday or five years ago. The basis for funding is to have full documentation to include tax returns, P&L Statement, and an 80 Paydex score. So if you don’t have those documents, you have nothing to prove how successful your business has been, or currently is.
Think about it: why would a bank give a person funding under these circumstances? Lenders took a lot of time earning their money and want to put into the right hands, hands they deem responsible. So, they qualify you, but they also make exceptions by looking at your personal credit file of how you managed your personal finances, which is proven by your FICO score.
Lenders think that more than likely the way you handle your personal finances will be the same way you will handle your business finances. They typically develop the belief that if you are prudent in governing your personal financial obligations, you’ll be prudent in governing your business financial obligations.
You are then considered a safe bet because you honor your commitments. Now if you don’t have a high FICO score in the 700s, and have a multitude of inquiries, don’t fret. You should still apply, because for one there aren’t any upfront fees and you will receive a funding estimate within 48 hours with only a soft pull on your personal credit. That way if there are any discrepancies, you can work them out and get funded within a short time period later.
Business Credit Cards do not affect your debt to credit ration either, because they do not show up on your personal credit file unless you default, but the inquiries do and those can be worked out as well. Payment history is the only concern of Business Credit Card lenders. It’s irrelevant to them if you max out the cards.
Avoid wasting valuable time in a catch 22 situation seeking out private lenders. Apply for business credit today and get your funding estimate within two days of application. Once approved and awarded, convert that credit to cash, get a mortgage, close the deal and repeat the cycle over and over again to build up your real estate portfolio. Then if you decide to seek out private lenders, you’ll have the successful track record they’re looking for.