How to Build Business Credit to invest in real estate

Never use your SSN for business credit!!

 (Disclaimer - This is information that I was able to gather together, I take no resposiblity)

Below is something I put together from research that I have performed.  You should be able to build up to $200,000 worth of business credit which you can use for real estate investing.

 

1. Establish your Entity (Corporation or LLC)

2. Obtain an ein # on-line immediately (Free of Charge) https://sa1.www4.irs.gov/modiein/individual/index.jsp

3. Get a mail box at a small mom and pop Mail Center using the real mail address NOT a P.O. Box number. Get your phone bill forwarded to this address.

4. Obtain a business telephone line at home using business name and
have it listed in the business pages and directory assistance.

5. Get a free Duns number www.ccr.gov and DO NOT PAY FOR CREDIT BUILDER -After you have at least 5 business accounts reporting, you'll receive a paydex rating (similar to FICO for personal credit). This is what credit builder does.

*REMEMBER - a paydex score will only take into account your payment history. Unlike personal credit, this is counted in days. For example, if you pay your invoices 14 days late, it will be reported as such. If you pay your account off before the statement or invoice comes, it will be reported as such. The bottom line: Pay your invoices on time, and you will get a better paydex score.

6. Open a checking account using business information

7. Set up the following business accounts, and make at least one purchase, you want to pay this off BEFORE the first statement hits.

FYI - You can obtain cell phones immediately using the ein # with no pg.

-Staples, Office Depot, and 4 or 5 net 30's

Go to https://eupdate.dnb.com/default.asp to check your paydex score.  DO NOT check this everyday, at most check it once a week. They only update on the weekends, so really there is no need to anyway.  Once you have a paydex score of 75+, you can apply for Lines of Credit (herein referred to as "LOC") or business Credit Cards without any sort of PG. 

(WHEN you have at least 6 or 7 reporting)

-Marathon, Conoco, Sunoco, Shell (or any 3 or 4 gas stations of your choice)

(wait 60 days...............)

-Home Depot revolving, Home Depot Expo, Lowes

(wait 60 days............)

-Dell, Wal-Mart, Sams
(wait 60 days............)

-HDMC, BPMC, Sams Discover

 

(wait 60 days............)
By now your report should be nice, all I can say is, ask, and ye should receive. SBA Loans, LOCS, Etc. - Make sure that when you submit the applications that you send a professional cover sheet (with your company logo to ensure you look "corporate") along with a copy of your state corporation document and a copy of your phone bill in the company name. Check Requirements prior to applying. 

 

Most companies will not ask to see financials for loans of 50K+


Citi Trio, Key bank, BofA, wells fargo small business.

(wait 60 days............)

Discover, Amex, Chase, Advanta

(wait 60 days............ you get the idea....)

Accurate Office Supply � (800) 325-2551 � Requirements:
PG: No
Paydex: No
Net 30, revolving account, 3 trades and 1 bank trade. Call to have application faxed to you. Reports to D&B, but does not report to Experian.

Best Buy � (800) 811-7276 � Requirements:
PG: No
Paydex: Yes � 65+

At least 2 years in business.

Chevron � (888) 243-8358 Requirements:
PG: Yes
Paydex: No

At least 2 years in business, DNB check revolving acct � net 30. Apply on-line. Reports to D&B and Experian.

Conoco, Inc. � (800) 764-9500 � Requirements:
PG: No
Paydex: No

Net 30-full balance, apply on-line located in 23 states, ask for locations. Reports to D&B and Experian.

Diners Club � (800) 234-6377 � Requirements:
PG: Yes
Paydex: No

Corporation accounts (minimum 5 cards) 3 years in business, $200,000 net worth, each card holder gives personal guaranty. Call to apply. Does not report to D&B or Experian.

Exxon Fuel � (800) 438-3996 � Requirements:
PG: Yes
Paydex: No

Net 30-full balance, 1 year secured or 3 years in business. Apply on-line. Does not report to D&B. Reports to Experian.

Fry�s Electronics � (714) 688-3000 � Requirements:
PG: No
Paydex: No

3 trades, 1 bank trade, net 30-full balance. Must submit financials and balance sheet before approval. Does not report to D&B or Experian

Grainger.com � (310) 327-7370 � Requirements:
PG: No
Paydex: No

Net 30-full balance. $1,000 min. credit limit, business license needed along with 1 bank trade and 2-3 other trades. Reports to D&B, but not to Experian.

Home Depot � (800) 685-6691 � Requirements:
PG: No
Paydex: No

2 years in business. Revolving account and/or net 30. Apply on-line. Reports to D&B and Experian.

JC Pennys � (407) 788-4022 � Requirements:
PG: No
Paydex: Yes

At least 6 months in business and paydex score required with no delinquencies. Call to apply. Does not report to D&B or Experian.

Kinko�s � (800) 488-3705 � Requirements:
PG: No
Paydex: No

Revolving account net 30, apply online, will check D&B number and verify business address. Reports to D&B only when requested by D&B. Does not report to Experian.

Lowes � (800) 445-6937 � Requirements:
PG: No
Paydex: No

Revolving account or net 30. 3 years in business. Reports to D&B only.

Macys � (800) 933-6229 � Requirements:
PG: No
Paydex: No

2 years in business and some credit history. Call to have application faxed to you. Reports to D&B and Experian.

Mobil Gas � (877) 959-1007 � Requirements:
PG: Yes
Paydex: No

Net 30-full balance, 1 year secured account or 3 years in business. Apply on-line. Reports to D&B and Experian.

Neiman Marcus � (800) 685-6695 � Requirements:
PG: Yes
Paydex: No

Must be in business 2 years and signer on account gives personal guaranty, call to have application mailed to you. Does not report to D&B, but does report to Experian.

Nordstroms � (800) 964-1800 � Requirements:
PG: No
Paydex: No

Net 30-full balance, 3-4 trades, verify 2 (trades should be net 30 accounts as well) call for application. Reports to D&B and Experian.

Office Depot � (800) 729-7744 � Requirements:
PG: No
Paydex: No

Revolving account, net 30. Must be incorporated. Print on-line and fax. Reports to D&B and Experian.

Office Max � (877) 633-4236 � Requirements:
PG: No
Paydex: No

Must have some credit history. Apply on-line. Payment has to be made after invoice is received. Reports to D&B and Experian.

Orchard Supply � (408) 281-3500 � Requirements:
PG: No
Paydex: No

Net 30, 3 trades with at least 3 months activity and 1 bank trade. Call to get application. Does not report to D&B or Experian

Phillips 66 Gas � (800) 648-4199 � Requirements:
PG: No
Paydex: Yes

Duns report pulled, 3 trades, 1 bank trade needed. Reports to D&B and does not report to Experian.

Radio Shack � (888) 773-2435 � Requirements:
PG: No
Paydex: No

Revolving Account, net 30. Reports to D&B and Experian.

Sears � (800) 917-7700 � Requirements:
PG: No
Paydex: No

2 years in business, revolving acct, net 30, call to get application faxed to you. Reports to: D&B and Experian.

Sinclair Oil Gas Card � (800) 340-3466 � Requirements:
PG: Yes
Paydex: No

At least 4 trades, net 30-full balance, personal guaranteed required from each cardholder. Does not report to D&B or Experian.

Speedway Super America Fleet Gas Card � (800) 643-1948 � Requirements:
PG: No
Paydex: No

Net 30-full balance, at least 1 year in business.

Staples � (800) 669-5285 � Requirements:
PG: No
Paydex: No

Revolving account net 30. Reports to D&B and Experian.

Texaco � (800) 839-2267 � Requirements:
PG: No
Paydex: No

Need some credit history. Apply on-line. Reports to D&B and Experian.

Union 76 � (800) 944-7676 � Requirements:
PG: No
Paydex: No

2-3 trade references, 1 bank reference, duns check done on large businesses. Does not report to D&B or Experian

Wright Express Fleet Card � (800) 395-0812 � Requirements:
PG: Yes
Paydex: Yes

Some credit history, 3 years in business, net 26, full balance. Reports to D&B only.

The Short Sale Process

  

Both foreclosure and a Deed-in-Lieu of Foreclosure affect credit the same. Home owners will take a hit of about 250 points on their FICO score. This means if a their FICO score before foreclosure was 680, it could dip as low as 430. A home owner who wants to buy another home after foreclosure will end up waiting about 24 months before a lender will offer any kind of interest rate that makes sense. During that time you must have a near perfect credit.

The affect of a short sale on a home owner's credit report is much less damaging. The negative on credit may show up as a pre-foreclosure in redemption status, which will result in a loss of around 80 points from the FICO score. It can also simply show up as the loan was paid off and not affect your score at all. This means a short sale with a previous FICO of 680 could possibly see it fall to around 600 or it could remain the same.

 

If a home owner is trying to decide whether to let a home go through foreclosure versus attempting a short sale, salvaging your credit is the main advantage to doing a short sale.

 

 

What is a Short Sale?

 

A short sale is when the lender of record agrees to discount their payoff to accommodate a sale when:

•1.                  the Borrower/Homeowner has experienced hardship

•2.                  the value is proven to be less than the amount needed to payoff all loans/encumbrances and real estate/selling costs

•3.                  the loan is delinquent/in default

 

 

How does a Homeowner benefit from a Short Sale?

 

• The Homeowner can avoid having a ''foreclosure'' on their credit report. Most lenders tend to report "settled" upon successful closing of a short sale. Recent reports state that if a borrower misses 2-5 mortgage payments their credit score will be affected by an estimated 30-80 points. If a borrower suffers foreclosure, it can affect their score 140-250 points.
• Assuming the Homeowner is already not making mortgage payments, they can continue to live in the property and not make payments during the lengthy short sale process. (Up to six months) They should use this time to save money for their next place of living. The lender of record actually prefers that the borrowers continue to live in the property.
• Most Homeowners feel it is the "right thing to do" when in default. They tend to feel that walking away from the house is irresponsible and unfair to the lender. It's a respectable option.

 

 

Why would a lender agree to this?

 

• Not having another "Bad Debt" on the books. Most investors require their lenders to not exceed 3% of bad debts on the books.
• Not having to complete the expensive foreclosure process including all of the legal fees and procedural duties.
• Not having to evict occupants and pay for their cooperation.
• Not having to rehab the property. (i.e. contractor bids, disgruntled borrower vandalizing, etc.)
• Not having to later sell the property for no more than the proposed short sale would generate, or even less when the market continues to decline.
• Not having to pay a commission to the R.E.O. Broker they choose to market and list the property for them. 

 

PROPOSITION 8 (DECLINE IN MARKET VALUE)

Under California State law as set forth in Proposition8, you are entitled to a temporary reduction in property taxes when the value of your property falls below the assessed value.

Proposition 8 reductions are temporary reductions which recognize the fact that the current market value of a property has fallen below its current factored Proposition 13 base year value.

When and if the market value of the previously reduced assessment (Proposition 8) increases above its Proposition 13 factored base year value, the Assessor will once again enroll its Proposition 13 factored base year value. Proposition 8 values can change from year to year as the market fluctuates up and down.

Any properties that have received Proposition 8 reductions in the prior year are automatically reviewed in the following year to ascertain whether that year's lien date value should be maintained, lowered, or increased. Unless there is a change in ownership or new construction, your assessment can never increase above the factored Proposition 13 base year value.

If you think your property is being assessed at a value that is higher than market value, submit an Informal Request for "Decline in Market Value" Reassessment form with our Office by June 2 of the year in which you feel you were over assessed. For example if you are contesting the January 1, 2008 assessed value you are requested to submit the form before June 2, 2008.

The form is available by either contacting our office or downloading from the internet. Our phone number is (510) 272-3787 and our web address is www.acgov.org/assessor.

Should you not agree with the results of your request, you have the right to file an appeal with the Clerk, Assessment Appeals Board's office. The filing period is from July 2 through September 15, inclusive. These forms are available from that office and various local libraries during the filing period. The Clerk's office may be contacted at (510) 272-6352. The appeal forms may also be obtained by downloading from their web site at www.acgov.org/clerk.

source: http://www.acgov.org/forms/assessor/decline_market.pdf

As a Realtor you come across so many different stories and unfortunate stories, this one definitely takes the cake.

A recent client of mine was defrauded out of over $100,000, in addition the title to his home was fraudulently taken and he is now on the verge of losing the home he lives in with his wife and kids. I worked closely with him to piece this crime together and found the people involved. We were able to find several of them this included people licensed by the state.

My client reported them to the LAPD and FBI. Both the LAPD and FBI took the initial report. The LAPD said the case was too small for the FBI and they are not going to do anything. The Police officer advised that he'll get back to him, but he is 8 months to a year behind.  Neither of them is actively assisting with this crime even though it includes federal offenses such as notary fraud, forgery, fake IDs and recording of false deeds. Since our initial report we were able to obtain more names, addresses, phone numbers, email addresses, pictures and even state license numbers, yet they refuse to return a call.  My client even confronted a couple of people who admitted to being involved and there level of involvement. They claimed that the leader behind the fraud has people working for him at the Title Company and the county recorders office.

A check was even cashed at a local liquor store for over $100,000 which isn't supposed to be possible without proper documentation being taken. After 9-11 the maximum amount you can cash a check for is $10,000, Homeland Security should be all over this, who knows what this money is funding.

When my client went to the County Recorders office, their response was "mortgage fraud is prevalent in Los Angeles; you need to get an attorney." They didn't offer any assistance, nor did they take a report to open an investigation for follow up.

After searching for an attorney, he could not find one who was willing to work Pro Bono. Even the least expensive attorney started at $10,000.  A major bank involved was even defrauded and they don't even realize it because of the way the title records were altered.

My client is a hard working husband and father who not only takes care of his own family but also sends money overseas to take care of others. It is shame this had to happen to him.

I am bringing this story to you because the system needs to be revamped, validations of notary stamps, need enforcement.   It's amazing our tax dollars will pay for criminal defense if you cannot afford it, yet when there is a victim of federal crimes we are not provided an attorney when we cannot afford one.

The last time my client spoke to the main contact of this transaction he even stated, "There's nothing you can do, you cannot even afford an attorney."  Mortgage fraud is the new perfect crime.

Due to the high amounts of shortsale's and foreclosures, I thought I would point out to landlords that Rent Skimming is illegal.

Source:http://www.legalforeclosures.org/html/rent_skimming.html

California Illegal "Rent skimming"

CIVIL CODE
SECTION 890-894

890. (a) (1) "Rent skimming" means using revenue received from the rental of a parcel of residential real property at any time during the first year period after acquiring that property without first applying the revenue or an equivalent amount to the payments due on all mortgages and deeds of trust encumbering that property.

  (2) For purposes of this section, "rent skimming" also means receiving revenue from the rental of a parcel of residential real property where the person receiving that revenue, without the consent of the owner or owner's agent, asserted possession or ownership of the residential property, whether under a false claim of title, by trespass, or any other unauthorized means, rented the property to another, and collected rents from the other person for the rental of the property. This paragraph does not apply to any tenant, subtenant, lessee, sublessee, or assignee, nor to any other hirer having a lawful occupancy interest in the residential dwelling.

  (b) "Multiple acts of rent skimming" means knowingly and willfully rent skimming with respect to each of five or more parcels of residential real property acquired within any two-year period.

  (c) "Person" means any natural person, any form of business organization, its officers and directors, and any natural person who authorizes rent skimming or who, being in a position of control, fails to prevent another from rent skimming.

891. (a) A seller of an interest in residential real property who received a promissory note or other evidence of indebtedness for all or a portion of its purchase price secured by a lien on the property may bring an action against any person who has engaged in rent skimming with respect to that property. A seller who prevails in the action shall recover all actual damages and reasonable attorney's fees and costs. The court may award any appropriate equitable relief. The court shall award exemplary damages of not less than three times the actual damages if the defendant has engaged in multiple acts of rent skimming and may award exemplary damages in other cases.

  (b) A seller of an interest in residential real property who reacquires the interest from a person who has engaged in rent skimming with respect to that property, or a law enforcement agency,may request the court for an order declaring that the reacquired interest is not encumbered by any lien that is or has the effect of a judgment lien against the person who engaged in rent skimming if the lien is not related to any improvement of the property and does not represent security for loan proceeds made by a bona fide lien holder without knowledge of facts constituting a violation of this title.

The motion or application shall be made with at least 30 days'advance written notice to all persons who may be affected by the order, including lienholders, and shall be granted unless the interests of justice would not be served by such an order.

  (c) A mortgagee or beneficiary under a deed of trust encumbering residential real property may bring an action against a person who has engaged in rent skimming with respect to that property as one of multiple acts of rent skimming, whether or not the person has become contractually bound by an obligation secured by the mortgage or deed of trust. The mortgagee or beneficiary who prevails in the action shall recover actual damages to the extent of the amount of the rent collected on the encumbered property and attorney's fees and costs. The court also may order any appropriate equitable relief and may award exemplary damages.

  (d) A tenant of residential real property may bring an action against a person who has engaged in rent skimming with respect to that property for the recovery of actual damages, including any security, as defined in Section 1950.5, and moving expenses if the property is sold at a foreclosure sale and the tenant was required to move. A prevailing plaintiff in such an action shall be awarded reasonable attorney's fees and costs. The court also may award exemplary damages; it shall award exemplary damages of at least three times the amount of actual damages if the payments due under any deed of trust or mortgage were two or more months delinquent at the time the tenant rented the premises or if the defendant has engaged in multiple acts of rent skimming.

  (e) The rights and remedies provided in this section are in addition to any other rights and remedies provided by law.

  (f) Rent skimming is unlawful, and any waiver of the provisions of this section are void and unenforceable as contrary to public policy.

  (g) Sections 580a, 580b, 580d, and 726 of the Code of Civil Procedure do not apply to any action brought under this title

892. (a) Any person who engages in multiple acts of rent skimming is subject to criminal prosecution. Each act of rent skimming comprising the multiple acts of rent skimming shall be separately alleged. A person found guilty of five acts shall be punished by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. A person found guilty of additional acts shall be separately punished for each additional act by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment.

  (b) If a defendant has been once previously convicted of a violation of subdivision (a), any subsequent knowing and illful act of rent skimming shall be punishable by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment.

  (c) A prosecution for a violation of this section shall be commenced within three years after the date of the acquisition of the last parcel of property that was the subject of the conduct for which the defendant is prosecuted.

  (d) The penalties under this section are in addition to any other remedies or penalties provided by law for the conduct proscribed by this section.

893. (a) It is an affirmative defense for a natural person who is a defendant in a civil action brought under Section 891, or a criminal action brought under Section 892, if all of the following occurred:

  (1) The defendant used the rental revenue due but not paid to holders of mortgages or deeds of trust to make payments to any of the following:

  (A) Health care providers, as defined in paragraph (2) of subdivision (c) of Section 6146 of the Business and Professions Code, for the unforeseen and necessary medical treatment of the defendant or his or her spouse, parents, or children.

  (B) Licensed contractors or material suppliers to correct the violation of any statute, ordinance, or regulation relating to the habitability of the premises.

  (2) The defendant made the payments within 30 days of receiving the rental revenue.

  (3) The defendant had no other source of funds from which to make the payments.

  (b) The defendant has the burden of producing evidence of each element of the defense specified in subdivision (a) in a criminal action under Section 892 and the burden of proof of each element of the defense in a civil action under Section 891.

894. If any provision of this title or the application thereof to any person or circumstances is held to be unconstitutional, the remainder of the title and the application of its provisions to other persons and circumstances shall not be affected thereby.

I blame the government for not regulating the mortgage industry for this housing crisis.  Homeownership being the number 1 investment vehicle for the United states should have had more protection than to let a bunch of mortgage brokers fool people into these silly loans.  This mortgage meltdown is now affecting people that had NOTHING to do with the loans, even renters.  I recently heard about a condo complex near me whose HOA fell $30,000 under because so many people foreclosed in the complex and the HOA dues are not being paid. The HOA is now late on their bills and may have to pose an assessment.  Rental prices are going up because homeowners now have to rent.   With all these bad things going on it's spells a great time for first time homebuyers.

If you missed the last wave, you better jump in with both feet.  There is only about another year or two of this down market.  Prices cannot go down too much more.  My suggestion is to start consulting with a loan officer and Realtor now to get at the least educated on what is going on.

With all of these acronyms and programs being created and dissolving, I'm losing my mind!!  I'm looking a nationwide lender whose niche is down payment assistance, first time homebuyer, FHA and HUD program expert who I can turn my clients to for immediate knowledge and assistance.  There are only so many hours in a day and I can't attend all of the classes for updates and changes.  Who's with me!?

You have a good keyword domain name, you added your meta tags, added great keyword rich content, but still no traffic, That's because everybody and their momma has done all this already putting your website keyword search term your site is number 4,589,723,475.  Nobody is going to look that far into the search results for your great website.  The sweet spot to be is the first 3 results of the first page, after that, clicks drop off dramatically.  After the third page, forget about it.  So how do you get to the top? Well you could pay to get the top spot, but you will end up spending more money than MC Hammer but we all know how that ended, or you could try to increase your Organic ranking.  Organic basically means ranking naturally without paying for advertising.  This is done through Search Engine Optimization, which we just finished doing in parts 1 and 2, but now we have to beat the competition.

The search engines threw a few more obstacles in the ranking calculations.  Too many people caught on to how optimize their site and filled it with spam sites.  So they came up with a way to figure out which sites are better than others.

One thing Google did was page rank.  Google page rank range is 1-10.  Even a 1 is not all that easy to get.  This is the amount of links pointing to your site and you not pointing back to them.  The reason it is one way, is because link exchanges is another way of building traffic.  Sites called link farms were formed so webmasters could exchange links with each other.  That was way too easy to do.  Page rank is also dependent upon the rank of the site pointing at you. The logic is that if a high page ranked website is pointing at your site then your site must be worth something.

Frequently updated content is another huge deciding factor on where you rank.  Search engines see this as fresh, up to date content, so it's considered "good content".  Also termed as Web 2.0 or UGC (user generated content). 

What is a blog anyway?  Blog is short for Weblog and it's the latest craze.  It's basically an outlet of expression for the world to read.  I must admit, I thought it was the stupidest thing ever and actually refused to conform.  Boy did I miss the boat!  There are free scripts like wordpress that make it really easy to implement a blog on your website.  Keller Williams website even has a blog function now.  Blogs are easy to update, you can have them ping the search engines to tell them you have new content every time you make a post.  Stay tuned for my thought on Activerain