A crucial part of your real estate education is learning how to leverage your investments and where to find funding for rehabbing. This is even more true now that so many have suffered from bruises to their credit over the last several years.
Some hard money lenders will finance repair costs or at least escrow money for them, though these loans have become much more scarce in the last couple of years. Similarly some private lenders will finance your repair needs on rehab deals, but many will also want to see you have skin in the game too. This means often at least needing access to several thousand dollars to complete your rehab deals. Even if you have cash in the bank, unless you find financing you will be limited on the number of deals that you can do at one time. So if your credit isn’t as great as it once was where do you look and how do you rebuild your credit quickly?
Some real estate investing education courses suggest building your credit by putting your savings into CDs (Certificates of Deposit) and taking out secured loans against them. This can work, but it is no longer the easiest and fastest way to propel your credit for real estate investing.
If your credit isn’t that bad you will find that obtaining store cards are often much easier to get approved for than credit cards. While putting your personal credit on the line isn’t ideal a good real estate education course will tell you that getting store cards for home improvement stores like Home Depot or Lowes can be a great way to delay the costs of rehabbing which can then be paid off once you flip the house you are working on. You will also find department store cards are great for other materials and appliances, while furniture outlets like Rooms To Go can provide the tools you need for staging. Obviously as you use this credit and pay it off your credit score will improve.
However if your credit is in really bad shape then you may have to begin with secured credit cards. Most real estate education programs are so out of date that they do not include this powerful way to build your credit. Most banks offer them these days and they normally convert to fully fledged credit cards after 3-6 months, rocketing your credit score.
One last piece of real estate financing education we must include in this post is building business credit. If you haven’t already you can register a company for around $100 and begin building business credit without a personal guarantee which could lead to a credit line in the range of hundreds of thousands of dollars.