All Forum Posts by: Steven Mingione

I saw the advertising for this company on Facebook and it keeps popping up on my feed.  My first impression was that this is too good to be true.  Nobody is going to extend you lines of credit for 0% for 12 months.  So curiosity got the best of me and I set up a phone call.  This is what I learned:

- They do not get you lines of credit.  They get you credit cards with the introductory 0% for 12-18 months that most major credit cards offer. (JP Morgan, Chase, Wells Fargo, Bank of America, CapitalOne, etc.)

- They ask you to pull your credit report from www.creditnav.com and send it to them.  Apparently they own this credit monitoring company and the way they pull credit reports and scores is special or something.  

- Based off of the score on your report, they use an algorithm to determine how much/many credit cards they'll be able to open in your name.  For a score between 700-750 they 'guarantee' $100K-$150K.  (I told him I have a 735, and that's what the guy told me I would most likely get funded at).

- They assign you a financial consultant and you contact this person to get cash deposited into your account or get proof of funds letters if you need them.  

- After 6 months they transfer all your credit cards into your business entity so these credit cards are not tied to your personal credit.

- Once the expiration of the 0% offers comes near, they start a second round of applications to transfer any balances you have on the first round and to increase your credit availability (they shoot for doubling, so if you started with $100K in the first round, the second round they'll go for $200K, $100K to cover the first round if you still have outstanding balances and another $100K to keep you moving forward).

- Their fees are $4,995, $6,995, and $9,995 depending on how much $$ they 'guarantee' they can get you.  So for my case, he said he'll guarantee $100K, so my fee will be $9,995 which will come out of one of the credit cards I get approved for.

- If they are not able to get you up to the 'guaranteed' funding they promised you, they will waive the fee and send you on your merry way with whatever they did get you approved for.

- The fee is good for the financial consultant and two rounds of credit card applications/approvals and managing your accounts for 12 months.  They will also teach you how to shop for credit cards so you can go out and keep building your credit lines on your own if you wish, or you can stay with them but pay the fees for subsequent years.

My $.02:

- The way they market for "Lines of Credit" is misleading, as most people know a credit card and a line of credit are two different products.

- Their fee is 10% in the case of $100K worth of credit cards, less if you are approved for more.  I'm not sure of what amounts will get you the two lower fees of $4,995 and $6,995.  Much cheaper than a hard money lender, not as cheap as conventional financing.

- Most people will not be comfortable with $100K of credit card debt on their record, let alone having to manage it...Keep in mind they help you manage this for 12 months though. 

- A concern I have is what will this do to my credit score if I'm trying to do conventional financing while these credit cards are being used at the same time...I'm a small time investor here, I'm not making millions yet and I rely on my good credit to get conventional financing.

- I like how they will transfer the credit cards into my LLC after 6 moths so that the credit/debt is off of my personal credit report, but I'm not sure how that is done and/or if it is possible to do.

- What's the difference between me paying them $10K to get me $100K worth of credit cards and me trying to do this on my own?  Supposedly they are able to get you all of this within 2 months because they have relationships with these major banks and based off of your credit history they know where to go to get you more yes's than no's.  If you did it on your own, you'll probably end up with too many inquiries on your credit report and not as much success on credit approvals and in a much larger span of time compared to them.  

Sorry for the length on this post, I just wanted to share what I learned.  I'm not sure if I'll be signing up with them just yet.  I would like to know if anybody here has used them and what they think of their program.  

Complete BS...these companies operate this way and get you credit accounts with companies and vendors that anyone can get on their own and charge you 10% of the line amount.  Run...don't walk.

Where are  you Duncan? You respond everywhere else!! The lady needs an answer.

@Alicia Waldman , first, you need to determine if the lender is a direct lender, indirect lender, or a mortgage broker. Obviously, dealing with a direct lender eliminates the "miscommunications" possible in dealing with a third party intermediary. However, good mortgage brokers have contacts with a number of direct lenders and can therefore provide "one stop shopping" for the most appropriate financing.

Before getting serious about financing, you need to determine what characteristics of the loan are most important to you. For example, some property investors use a quick close to help negotiate a low price; to these borrowers the ability to make a decision quickly and fund quickly is of paramount importance, so that they will pay higher interest rates and fees in exchange for speed. To investors with poor personal credit the most important financing criteria is loans based on the asset itself rather than credit; these investors are candidates for so called hard money loans. Investors seeking financing for properties they intend to hold long term purchased at fair market price will usually seek the lowest interest rate and/or lowest fees - provided they have 25 or 30% down payment money available. If they have little in the way of a down payment, they will have to find a lender that lends on APPRAISED value rather than on purchase price - and pay significantly higher interest rate and fees.

Once you have determined the loan characteristics most important to you, you will have to choose whether to use the services of a mortgage broker or go directly to a lender. Finding a good mortgage broker will save a large amount of time, and also expose you to lenders that work exclusively through mortgage brokers and don't deal directly with investors. Dealing with a bad mortgage broker will often result in getting a loan not fitting your criteria, or paying way too much for the loan, or worst of all being strung along and losing the property under contract by not being able to perform.

You need to do due diligence on any mortgage broker or lender you are dealing with. Past references are best - check them out just as you would when hiring a nanny for your children or a contractor to improve your house. Also, having predetermined what is important to you in a loan - speed, low down payment, no credit check, or low interest rate/fees will enable you to concentrate on the lenders and brokers that deal in those types of loans.

One important caveat - If you have 25% down payment money available, a credit score of 720+ and the time to close, you will be able to score a long term low interest rate loan that will allow for a positive cash flow on a large number of investment properties. If you are lacking in one or more of these areas, finding a property that will allow a positive cash flow will be a lot harder as fewer properties will be able to qualify. In this scenario many investors turn to properties attractive to low income tenants - sometimes very profitable but always a managerial headache and often a managerial nightmare.