I've read thru this entire thread and I'm happy I did so.
MY eyes are bleeding right now!
Hat's off to all the posters
-Wonderful information that you would have to pay Big $$ for !!!
A little history...
I used to be in business until 1997 as a S-corp (3/4 MIL annually) and had paydex of 80.
I expatriated for several years after I sold the company and since I returned to the USA, I've had to start all over again.
I got my FICO up to 760 in 4 months but it's suffering right now due to 4 HELOCS (revolving LOC's with WashMU)
I went in RE upon returning 2 years ago-under a sole-prop-BIG MISTAKE!
I used personal credit cards for rehabs (after having to rebuild a credit profile-because I became a ghost in the system from living abroad)
If anyones in RE and wish a credit line DO NOT
let lenders of LOC's know that! -Say your a residential design consultant/specialist-Lenders like to feed the mortgage system and will not give you a large unsecured LOC
Due to the low price of RE where I now live, LOC's are the desired way of buying homes for cash.
For example, I bought a Bank Repo 4bdrm/1-1/2 bath for 13K-appraised and resold in 3 months at 50K- after only investing 3K in remodel materials (lease/option tenant did allt he work for a reduction in sales price
I bought another all brick 9 room Victorian 4bdrm/2bth at auction for 22K.
I plan to get 50K LOC's to do this type of thing locally.
Here's the plan-Perhaps this will help others trying to start LOC's and answer their questions.
I'm going to buy a Wyoming 2 year old shelf C-corp (good link- BTY I already planned on using them)
All credit applications I see, All large LOC's, Will require a personal guarentee for any business under 2 years old-or not qualify you at all.
2 years is also the cutoff point for qualifying for any sort of decent business credit.
(the cost is neglible compared to points,fees,CC interest I've been paying up to now).
Why a C-Corp?
Because I like to try a Reg D Sec filing to raise funds down the road-and -even though some will argue-your not double taxed on income-if you structure the dividends to officers properly.
(I also have several ghost officers to list-with good credit)
I'll register with the state I live in as a foreign corp.
I'll pay for the phone/mailing fowarding servicein Wyoming-It looks better on applications...And, I plan of re-expatriating in 2 years and will still need to handle business abroad. You can live pretty well on 3K a month in the right tropical country..
I'll use Credit builder because timing is of the essence and I have great payment history with some of my current lenders/trade lines.
I'll develop more lines in the next three months as well.
I plan on taking an advance from an LOC and let it sit in the bank for two/three months,
Why? When you have an average daily balance of over 20K, you can easily qualify for corp mortgages and more LOC's. It makes a strong balance sheet. -especially with equity of properties included
If I need the cash for a purchase, I'll do a non-seasoned refi and put it right back.
As time evolves, I'l do some local flips on repo's/foreclosures for immediate cash as I acquire buy-and-holds that have remote management.
By buying these deals cash, good.gif I can deed them into the corp name and it will make the balance sheet look fantastic.-not to mention the asset protection benefits!
Then when the big deal comes along (2mil+) I'll easly qualify with RegD or for straight corp/personal financing. You can even use these LOC's to get the 20% required for commercial financing as well.You can always non-season refi and pay it back right away.
The Credit links/Vendors listed are fantastic-Thank You!
These have been cut and pasted into my files.
Although it's probally worth the $$, You just saved me and everyone from having to buy this service.https://www.business...etting-help.asp
Here's a list of business credit cards that I had bookmarked, for those that need to build a Paydex and get business credit.http://www.asapcredi...ness-cards.html
There seems to be a big side-line with mortgage brokers and others in getting 100/200K business LOC's lately.
Ive got over 6 links bookmarked at this point.
You require a minimun 680 FICO, 2 Years in business (here we go again - with the reason for a shelf corp!)
Some of these WILL show up on your personal reports.
Not a big deal, If your gonna flip a propertyor do a non-seasoned refi right away! and pay it right back-it will kill your re-finance interest rate though-if you wait too long and Fair Issacs catches it- and drops your FICO.
This has happened to me..I had tro pay 9.5% interest on a refi.You can go full SA/SI -if your FICO is above 680!
I see people charging points for these LOC's from 2-8%!
(compared to mortgage brokers,points, credit card interest??
It's ok, it's acceptable for a 1 life-time charge for the LOC)
Thanks to everyone that has submitted this wonderful/informative info.
Palm Beach Investments
Edited by eldorado, 17 September 2006 - 01:03 PM.