All Forum Posts by: Anna Swartz-Lopez

Try Hemlane. I have heard good things. 

I believe you need to update the business address with the Secretary of State. Here in California that is the protocol. 

Hello Kevin, good for you for starting the journey! 

The key to understanding business credit, is understanding the importance of separating personal and business finances. Why should you separate business from personal finances? 

Reason 1) liability protection. If you operate a business and someone sues your business, will they be able to get to your personal finances, including your home? If you commingle personal and business, the answer is yes. 

Reason 2) taxes. A business entity can deduct business expenses, while a sole prop that commingles assets, cannot. 

Reason 3) finances. If you are purchasing investment property that you will not live in, lenders prefer to lend to an entity like an LLC or a trust. The lenders that I work with in this space WILL NOT lend to an individual.

Reason 4) credit. Length of credit file is one of the key elements of a credit report. The sooner you begin building business credit, the better and more robust it will be. 

Reason 5) credit. Building your business credit allows you greater flexibility. Imagine doing a fix and flip and not having to borrow to cover the cost of repairs, but instead being able to finance that with your business credit. Imagine being able to handle cost over runs without having a last minute, desperate call to an investor. 

Reason 6) credit. All too often, investors end up wrecking their personal credit in the process of doing a project. This makes makes you unattractive to lenders. Imagine having business credit in place that can handle the sudden cash needs of your business. This protects your personal finances and it also protects your business, as well. 

Reason 7) Run your business like a business, not a hobby. 

These are just a few thoughts for you Kevin, I hope it adds perspective. 

No, that's not correct. FHA loans can be used to purchase a duplex, with as little as 3.5% down, but one of the units must be owner occupied.

Check out Hemlane, I have heard very good things. 

First of all, it is important to understand that there will be a difference in getting a mortgage for a property held as an investment property, and a property as a "second home." For tax purposes, if you hold the property as an investment property, then you can depreciate it, which is where the major tax value of real estate investment comes in. 

Also, the reason the online widgets probably aren't working for you, is probably because it is very unusual to find a property for under $100K. In May of this year, the median home price in the US was $284,600. I know it all depends on your local market, and I would suggest talking to your local community lenders about your plans. They may be more willing to help you buy a second home than to help you buy an investment property. 

On another note, if you are uncomfortable being a landlady, have you considered working with a Property Management Company? A property manager will handle all the interactions with the renter so you don't have to. From a liability perspective, it also protects you to hire a property manager instead of doing it yourself. 

Your network is the measure of your success! Focus on building up your network. Consider getting involved in local networking groups like BNI, or even Rotary, and especially in Meetups targeted at real estate investors in your area. Real Estate is a team sport, and you need to build a network of professionals that you want to work with, and also that will help you figure out how to navigate the real estate arena in your local area. 

Hi Traci, 

Good for you! It is always difficult to get started, and I applaud your willingness to begin. 

As a loan broker who works on the financing side of things, let me just say that lenders usually prefer that you own the land outright. Financing land can be very difficult - though not impossible. Your project will probably flow more smoothly if you purchase the land so there is no debt on it, and then finance the new build. 

Lenders also feel more comfortable extending these kind of loans if the borrower is experienced. For your first project, perhaps consider partnering with someone who has the experience to guide you through the process, and also the experience that will make a lender more likely to finance your build. A JV, or joint venture, can be a useful tool when one party has the capital and another party has the experience.

On another note, local community lenders will be more likely to work with you than larger banks. In each community there are usually one or two local lenders who specialize in financing single family home construction. Ask around and try to figure out who those lenders are in your area. 

As I mentioned, I am a loan broker and I do work with specialized lenders who operate nationwide and who will fund this type of construction. However, you really need the experience piece to get approved with those lenders. 

Hope that helps! And good luck to you! 

Hello Annie, 

Congrats on getting started! The first one is always the hardest. I just sent you a message. You have some good financing options right now, let's set up a call to discuss. 

Morgan, that's probably what I would try to do if I were in your position.