One thing many real estate education programs don’t cover but which is advantageous to maximum profits and protection in real estate investing is the benefits of business credit.
Utilizing business credit for leverage in real estate investing is great for separating personal and investment income and assets for protection from liability as well as lowering the risk of investment.
Unless personal and business (investment) income and assets are kept separate investors personal assets including cars, homes and savings can be at risk from malicious and frivolous lawsuit and the reverse in the case of divorces or lawsuits and judgments levied against individuals.
Investors seeking additional funds for repairs, materials and items like appliances can also be better off utilizing business credit for financing rather than encumbering properties with more liens or larger loans. This provides more flexibility in selling leaves additional equity in case the market turns for the worse and lessens the debt payments needed to prevent foreclosure. Often business financing or alternative methods of financing these items can be found cheaper and with deferred payments elsewhere for lowering overhead until homes are flipped.
Where to find business credit?
- In store financing/ store credit cards
- Business credit cards
- Business lines of credit form a bank or credit union
- Corporate credit and accounts from vendors
How to build and improve chances of obtaining business credit:
- Build relationships with bank managers
- Secured cards
- Showing responsible use of credit and not maxing out lines available
- Keeping organized financial records
- Incorporating your real estate investment business and additional entities for acquisitions early on
Note that corporate accounts can also be used for a variety of other daily needs for real estate investing businesses from office supplies to phone and internet connections to subscriptions and car loans and rental cars for minimizing personal tax liability and obtaining additional discounts. Capitalize on these opportunities for maximizing profit margins and increase net income.