Leverage Business Credit to Scale Your REI Business with Leo Kanell

Welcome to another episode of the Smart Real Estate Coach Podcast, your source for actionable real-life examples and advice to help you move to the next level of investing. Each week we help you make a quantum leap in your business, your finances, and/or your life. We want to help you take back control, help you thrive during chaos, and lead you through the current crisis to a better tomorrow. For more resources, check out smartrealestatecoach.com. And be sure to give us a rating and review on your favorite platform.

Good morning and welcome, Wicked Smart listeners. It's Chris Pre with another Wicked Smart Masters Class. And today I'm bringing back a repeat guest, Mr. Leo Cannell, founder of, uh, and CEO of Seven Figures Funding. Now, little background, guys, a little context. Go to episode number 387, like over 100-something episodes ago. And the episode title at 387 is called Funding Your Small Business with Leo Cannell. Now, we just spent 2 and a quarter days in my conference room with 16 wicked smart community members. And one of the mornings I went through with them the importance of establishing business credit, even though we teach no money down, right? There's a myriad of reasons, and Leo and I are going to talk about them here, but I want you guys to use this as a practical thing you can act on today. Today. Um, I'm going to give you links and stuff at the end, but the fact is whether you and I ever meet again, uh, in whether you ever come in our community again, Leo is someone that you should establish business credit with. So as you grow and your lines of credit grow and you use those cards and lines, you're not affecting your personal credit.

All right.

Now, Lil also is the host of Seven Figures Club podcast, and he co-founded the My Figures Cash Flow platform. He also authored a bestselling book called The Business Funding Formula. So he's got you set up pretty cool, guys. He and his teams have secured over half a billion, half a billion in funding for thousands of clients just like you and I. His calling really— see, my wife and I had a chance to have dinner and drive him back to the hotel. Uh, a couple of QLS Live events ago. And really, we, we came to find out how passionate he is to serve small business owners and help, help with funding and cash flow and making great decisions. He's just a well-rounded guy that wants to help you truly from the bottom of his heart and to create an epic life for you and your family. Uh, on his end, speaking of that, he's a husband, father of 5 kids, speaker, author, fights relentless fitness endeavors. Just really, really cool cat. All right. Um, with that as a background, Leo, let's jump in. All right, Leo, with that as a background, welcome back to the show, buddy.

Oh, excited to be back, Chris.

Yeah. So I, it's funny, we just had a bootcamp here in the office and I spent the better part of an hour one morning just telling them all the reasons in the room why they should be dealing with your company, but all the Wicked Smart listeners weren't there. Right. So, Um, why don't we, they can go to that episode number 37.

That's fine.

But let's give them a 10,000-foot view of sort of your specialty. And then I want to jump into some new stuff that you're working on, which is really cool. And they can come see you just so I don't forget to say it on August 7th on our Wicked Smart Sit Down. It's free, guys. Every Thursday we've been doing this since like, oh gosh, 2017 or '18. And Leo's going to be our guest on August 7th, 4 o'clock Eastern Standard Time on Zoom. So Leo, yeah, give a kind of a 10,000-foot view of what's going on in the business funding world and then we'll jump forward.

Yeah, perfect. Sounds like a plan, Chris. So yeah, my background, like yours, I've been an investor of real estate now for, it's going on about 22, 23 years. Obviously you've done a little bit longer and you're more expert than I am, but I have been a real estate investor and we've been I'm fortunate to serve a lot of real estate investors. One of the things you learn about being a real estate investor is you're never in that position almost ever where you always have access to enough capital. And the great thing about the Wicked Smart community is you guys are very good at getting into deals without having to have globs of money, which I think is a great way to lower your risk. But even then, especially when you're doing multiple deals at a time, you've got to come up with a few thousand dollars sometimes for each deal. to make things work, to get it under contract and to show a seller that you're very serious about moving that forward. Sometimes there's home inspections, different things that come up. And when you're in that space, you've got to come up sometimes with $5,000, $10,000, $15,000, $25,000. There's little things that need to be taken care of maybe before the buyer gets into the property when you're doing one of your lease-to-own type deals. And so you've got to come up with this extra cash. And so our focus over the last decade is how can we get money in the hands of these dealmakers so that they can make deals and push the economy forward and create real estate empires and different empires in business. And so the core of what it takes to qualify and make that happen hasn't changed, right? It still comes back to focusing on working on your personal It comes back to having some kind of verifiable income, even when you take into account depreciation on your tax returns as a real estate investor. And so that business funding formula is still very, very much the same as it's been the last decade. And so it's focused on, all right, let's make sure that we manage our credit cards wisely. One of the quickest ways to raise your credit score is to be able to pay down personal credit cards. And as a business owner, as a real estate investor, it's starting, let's build business credit, right? Let's get the LLC building its own funding and getting funding in the name of that so that we don't have to use personal. Because sometimes, you know, as real estate investors, we use a line of credit, we use a business card, we pay it down a few months later. But if we're only using personal, And that lowers your credit, it hires your insurance rates on real estate, it makes everything more expensive. And so if you can start to develop the business credit side of things with your LLC and take a few steps to build business credit and get financing in the name of your business in a revolving credit account that you can tap anytime. And the coolest thing is, I was just speaking at an event a month ago and they were like, It was a big event. They had like 4 or 5, no, I think they had 600 or 700 people. They were like, you got 3 minutes to go talk on stage. And I'm like, really? 3 minutes? How are you going to make this happen? So I was trying to inspire at least 100 people to apply for financing. I thought, what's the best way I could do that? I thought, you know what? I'm going to pull out this card. It's a business card in my pocket with a $115,000 limit. So I pulled this out and I'm like, who needs $100,000 right now to make some deals work? What, $100 grand? change your business trajectory as an investor, as an entrepreneur? And I pulled it out and I said, everyone raise their hand if that would make a difference. And 90% of the people in the room all raised their hand like, yes, that would make a big difference. And so that's what you want to have is that flexibility, that ability to be able to access capital, access money when opportunities come and do it in such a way that it's showing up on your business, not weighing you down personally. And so that I think is what every business owner wants. And then the coolest thing about this is you can use your business card to get these cashback rewards. The story I always love to share is a couple years ago we took my mother-in-law and father-in-law. They'd never been to Florida. They'd never been to Disney World, Universal. We took our 5 kids and our cashback rewards from our business card, just doing projects and doing deals. That paid for the entire trip. And that's when you start using some of these smart money strategies as a real estate investor, as an entrepreneur that most people don't know about, and they certainly don't teach you about in school.

I love it. So I want to, I want to make sure I put a big explanation point, Leo, on the personal credit thing. So they'll, they'll only check your personal credit to make sure you're, you're legit. But then after that, the business credit's going to report, um, not to the personal credit report.

It's a big, big deal. Yeah, that's absolutely right.

Yeah.

To get that initial approval as a business owner, as an entrepreneur, real estate investor, they'll always look at your personal credit. But then as you're building business credit, you can get those accounts set up in the name of the business. And when you use those, and if you have to max them out, heaven forbid, because you got a great deal or 2 or 3 or 4 or 5 because they're working in your community, well, it's not going to have a negative impact because those balances are not going to be reporting on personal credit. So it's almost like that adage of, you know, own nothing but control everything. You know, if you talk to some of those asset protections, it's like have the really good personal credit, but instead get the financing in the name of the business and utilize that as much as possible so that you aren't necessarily tying everything back to personal credit.

So how, let's address some of the basics again. How hard, Someone's listening to this, they didn't hear episode 387 yet. They don't know how difficult is it for them to get their new LLC and how new can it be, those criteria for them to know.

Yeah, great, great question. The good news is even if you don't have an LLC set up, you can get one set up. Our team can help you get one set up and write it. Even though it's brand new, you might be able to qualify for $30,000 to $50,000 in new financing in the name of that LLC. Just by getting it set up properly. And usually we recommend setting up in the state where you're at. There's different strategies where you can use a Wyoming entity or, you know, a Delaware entity. But at the end of the day, usually there's less headache and issues getting everything set up. You can set it up in your home state. And once you have that set up, you have that business bank account set up, then there's a few simple steps you can take to start building credit in the name of the business. But right away through our system, you can go ahead and get access to business cards with a 0% interest rate, with full cash accessibility that do not report to personal credit and weigh you down. And so you can get started. And sometimes we get started small. That $115,000 business card, it started out with a $10,000 limit. And within a couple of years of following our strategy, without even asking the bank to increase it, they increased it to a $115,000 limit. And so there are lots of different strategies you can employ to build that business credit up.

I love it. I love it. So pretty much right out of the gate, they can— before they got out of the gate, they can— before you got to the LLC. So if someone's in this, they're brand new, listen to this and go, okay, no-brainer, because I need that for rainy day or need to do deals with Wicked Smart even. And they want to— will there be a— will there be an avenue where they have to do some personal and some business debt first sometimes, depending on their whole picture, or Not necessarily.

Yeah, it depends on how established their credit is, but at the end of the day, you always want to have a larger runway. And so even if you have to use personal, you're going to inevitably typically get access to more capital if you do a combination of business and personal funding, and then use the business first and you only use the personal if you have to. But having access to that capital and that credit Personally, it does 2 things. Number one, it gives you a higher credit score because it shows the credit bureaus that you have more available credit. If you have 2 or 3 small credit cards and they're all maxed out, then your credit score is going to be much lower because the credit bureaus and the system will be like, wow, you're one missed paycheck from defaulting on these cards and being in a bad spot. But if you have $50,000 in available credit personally and you're only using $5,000 and haven't God forbid you need to use 10 or 15 of it, you still look good to the credit bureaus because you're not even using half of the available credit you have. And so part of the strategy isn't necessarily to use personal funding, but it's to have it available in case you need it and to also build your personal credit profile so it's stronger. Because again, the stronger your personal credit profile is, we know how much this makes a difference, right? Your insurance rates are lower. Obviously any financing you ever get, a car, a mortgage, et cetera, are going to be lower. And so it makes sense to always have that high credit score and be able to access credit if you need it.

And they can do this without a ding to their credit, right? They're not going to have a ding on their credit just by checking to see what they qualify for. Am I correct?

Exactly right, Chris. And you know what's sad? I always ask this question to people. Hey, if you go down the street to your local bank or credit union, you want to see what kind of financing you can get for your business. And the name of your business, is that going to be a hard credit check? And people are smart now. I ask 'em that question, they all know, yes, that's gonna be a hard negative impact, hard credit pull on their credit just to find out what their options are. And it's funny, those archaic systems are still in place, but we are approved with Experian soft credit check program. They came, inspected our office and deemed us very secure and said, great, clients can get a free pre-approval. with no negative impact to their credit profile, a soft credit snapshot, if you will, just to look at options. And so that gives you flexibility to know, good, it's not going to hurt me. And then number 2, you can actually speak with our team and ask all the questions. Hey, what about this? What about that? What's available to me? And we love real estate investors. We've served over 1,000 of them with financing over the years. And so that's what you get.

Okay, who wants to be the next apprentice? Pretty interesting, guys. We started this apprentice program back as a July 4th, 2024 promo. That's where it started. And it was so incredibly effective. We were just going to run it for the summer. It was so effective immediately, we kept it. It's in place now. And what is it? It allows you to get into the community, the Wicked Smart community, for less dollars than the QLS home study course sells for right now on our site. In fact, When you go to smartrealestatecoach.com/apprentice-pod, apprentice-pod, when you go there, you're going to see that as an apprentice, you're going to get over $13,000 worth of coaching, the possibility for you to touch base with us if you want to, 4 or 5 times a week. And it doesn't exist anywhere out there, frankly. That's why we did it. We did it for 2 reasons. One, no one is giving you the support out there. We keep hearing feedback, which is how this was born, that other educators are not giving support. They're just selling stuff. So it doesn't exist anywhere and nowhere in the real estate education or coaching space. And we want to help you do one thing—

deals.

So we've wrapped the support mechanism around this. We've allowed you to get into a Slack community with the other associates who previously were protected in Slack. And now you get to jump in there and experience that for 12 weeks. You also get to come to the In the Trenches boot camp, which is private. It's a chance to hang out with the family team and one of the coaches for 2 and a quarter days in our conference room, roll up our sleeves, get calls done, get deals done. If you come with leads, you leave with deals. Absolutely incredible. I could go on and on. Go to the website right now, check out more information about the Apprentice, and I'm going to give you the In the Trenches boot camp site because you don't have to become an apprentice. It just happens to be free with apprentice and associate. So 2 links I'm going to give you, super important. smartrealestatecoach.com/ittb-pod. That's going to give you some information about the boot camp. If you want to buy a ticket to the boot camp, it's more expensive, but you can just come check us out. About 1 or 2 people every time we run it do just that or become an apprentice and it's for free. smartrealestatecoach.com/apprentice-pod. Yeah. And just for the Wicked Smart listener to know, Leo and Seven Figures have been with us for many years now. And there are just, I don't, I lost count a long time ago of how many Wicked Smart community members are using, utilizing the system, utilizing it for deals, utilizing it for coaching, utilizing it for whatever their personal circumstances or business circumstances might be. Leo, let's give them, I want to give them your link actually, if they want to just go check it out for a soft pull and see what they qualify for. Just go to smartrealestatecoach.com. /7, the number 7 figures. Real simple, guys. Talk about taking action. There's one nugget for you. Leo, what I want to do, since you're going to come to the sit-down on August 7th and then the October 6th and 7th event in Boston, what's like new and happening and cutting edge that they might hear at the sit-down? We're not going to start ripping apart everything now, but what can they expect to hear at the, let's say, the sit-down, which is coming up in a month or two?

Yeah, great, great question. So for our sit-down on August 7th, One of the questions we've been asked over the years, Chris, is, all right, Leo, awesome. You know, I'm going to get these 4 or 5 accounts in the name of my business. I've got my bank account. You know, maybe you've got a mortgage on your primary residence and using smart real estate coaching tactics to buy other properties, but you have at the end of the day, 10 or 15 different financial websites that you have to log in every month to manage everything. And that's a concern. And so we've heard this concern from clients that we've served over the years, like, how am I supposed to manage all of this and due dates and balances and all of these different factors? And then how do I know if I'm actually making money in my business? Because I've got expenses, I've got income, I want to know that I'm winning. And so for years we're like, oh, there's got to be a really good affiliate program to some sort of fintech platform that we could get set up with. And we just kept looking, we couldn't find one. And so 3 years ago we finally said, well, let's just create this solution. And especially for real estate investors where you can have your properties listed there, you can have what the cash flow is looking like and connect up your business bank accounts, your business credit cards, everything in one place and be able to manage it. And so that's the platform we've been busy building up and that we're going to be able to really Reveal that platform on the August 7th sit-down for everybody, exactly how it works. And it makes it so easy to manage all of your accounts in one place. It makes it so easy for you to manage cash flow because that's what we're talking about, right? At the end of the day, are you bringing in a lot more than you're spending as a real estate investor and as a business owner? And if you're doing that, you're winning. And most people, they bring in some money, but they forget, dang, I've got all this outlay and they never quite know where they're at. And so that's what we've been working on is this fintech platform to really solve that problem.

And that's great. Just, I just want to make sure I'm clear. That's great for, you know, Joe solopreneur and anyone building a business and actually even more so at the beginning, right? To get the habits ingrained.

That's who we built it for because some of these other systems out there are very complex. They're for CPAs and accountants and, you know, big Fortune 500 companies. And yeah, if you're solo, entrepreneur real estate investor and you've just got a few projects and a few accounts, but you'd like a nice little, a nice simple, easy-to-read place where you'd be like, am I winning? Am I making money? And what we call key financial indicators. So we build out a dashboard with key financial indicators. You'd be like, hey, here's how much money you brought in in the last 30 days. Here's how much money went out. Here are your cash balances in your accounts. Here are your loan or credit card balances. So you know where you're at. And then you, and then here's your last 3 months. So you can see immediately if you're winning and then make good decisions based off of that data. So the user can literally just log in every day and like, oh good, I'm winning. Or, oh wow, I better make some changes or I'm going to be out of money here.

Yeah, I love it. What are some, before we wrap, I have 2 things. One is, what are some, you've gone so many people through your system, mistakes that you've seen entrepreneurs make where you sit Because I do it in the real estate world where you look in third party and go, man, why are they doing that? What do you see all the time that you wish you could nip? Anything come to mind?

Yeah, no, a few sad stories where people qualified for a lot of revolving credit, meaning it's in a line of credit format, it's in a business credit card. I'm not paying on it unless I use it. And for whatever reason, you know, I'm the oldest of 9 kids. I just heard my parents always talking about getting out of debt and they didn't understand that there's good debt, there's bad debt, having access And one of the biggest mistakes new real estate investors and business owners make is they're like, oh, I qualify for $50,000. Well, I just want to take $20,000. And they think that they're helping themselves by doing it, but they're not paying on it unless they actually use it. And so they just take the $20,000 and they use all $20,000 over 6 to 12 months. And then they come back later and they're like, oh, I need the other $30,000 that I did qualify for. But they don't qualify anymore because now they've tapped out their credit and their resources. And so the time to get access to as much money is now. It's when you can get access to it and then being smart with it. Yes, don't utilize it unless you've got deals that are going to make you money and they're following your system and the guidance of your smart real estate coach. But you get access to as much revolving capital as possible so that you have that runway Sometimes you're going to have to walk away from deals if you don't have access to that capital. And I just hate seeing people make that mistake. They come back and then they get in a bad situation because they didn't access as much capital as they could have. So that's one big mistake. Another big mistake is just as simple as not setting things up on autopay, right? In today's world, every account you have on credit should be on an autopay format so you never have to worry about that minimum monthly payment being made on time. And again, one of the sad mistakes we'll see is someone who always made their payments on time and inevitably they go in and they apply and, oh wow, last month I had 2 30-day lates on my student loan, on my car payment, because I just, you know, something I forgot to check on it. And so you just want to make things easy for yourself, set up that autopay, and then you really should be checking your credit once every month and you can do that. You know, at experian.com, you can even do it for free and just make sure that everything is updating and nothing weird's going on.

I love it. I love it. Leo, in addition to the link I gave, is there any other way that you want them to reach out to you or things they can see before the sit-down? Anything you can think of?

Yeah, no, the link is going to be great because immediately you're going to get a text or an email after you fill out that simple form. And you'll notice we don't need your social. Because it is indeed a soft credit check, just date of birth, residential address, and contact information. If you have a business entity, an LLC, you can put yes on there and put any information. But if you don't, that's fine. You could put no, and you'll still qualify for financing options to get your business off the ground, to start investing in real estate, to get some education programs financed. And then we also have 2 free gifts with the Smart Real Estate Coach Community. And this is the question I've asked people all over the country, Chris. I'm like, hey, did you learn a lot about credit in school or college? And 99% of the time the answer is unfortunately no. And so everybody who applies through the Smart Real Estate Coach link here is going to get free access to our Credit College platform to learn how to build really good personal and business credit. And you're also going to get access to the Business Funding Formula book I wrote that's Available on Amazon, but you're going to get a digital copy for free just for looking at your options today.

Sweet. Great nuggets. And thank you for the gifts. I didn't, I, if I knew that, I forgot, Leo. I, you know, I can't remember everything. Any last-minute nuggets, Leo? Something I didn't ask you just so I don't leave anything on the table before the sit-down. I know you're going to go into a lot deeper there, but anything you could think of?

You know, the last thing I would say is something magical happens when you have access to capital. Because before you have it, you know, your mind's sort of closed off and you look at opportunities like, oh, I can't do that. I can't do, I can't afford to do that. I can't drain my savings account. Then all of a sudden you go and you get access to financing at a 0% interest rate. And now all of a sudden you open your mind up to new opportunities and those new opportunities will be attracted to you because you open up the door and now you can make the best investment, which is investing into yourself, learning from someone like you, Chris, who has a roadmap for success. That's what opens the door up to success. It's not going and trying to figure all this stuff out on your own. And when you invest in yourself, amazing things happen. So just getting access to that money and being able to invest in yourself makes a tremendous difference.

Yeah. And I'll give a quick story, Leo. We, people ask in the bootcamp last week, well, you know why you guys teach this all the time? Why are you sure I need to do this? Yes. I'll give you one of 30 stories. Well, when Zach, my partner and son-in-law came in, his very first deal he did, unbeknownst to him, had a major lead issue in the house. And I had already been through your system. We had already had the lines set up. And so we didn't sweat it, but it was a $32,000 lead job. It was morally and ethically the right thing to do. They had 5 kids and no one knew. So we did it even though legally we didn't have to. And so if you didn't have that, Leo, um, I mean, Zach's story is, he said, if I was on my own, I would've been out of business because he couldn't have done anything, right? So because we had that set up, so it's so important. Trust us, trust the system, trust Leo's experience, and run with 7 Figures and Leo. They'll take good care of you. Leo, thanks so much for being on. I look forward to hanging out on the Wicked Smart Sit Down, my friend. My pleasure.

Thanks, buddy.

Okay, Wicked Smart listeners, that does wrap up our time together with Mr. Leo Cannell. Reminder, qlslive.com. Go grab your ticket. And if you're an apprentice or you're an associate, get the link on Slack because it's free for you. You just got to register a guest because the food we serve there is just ridiculously good and we want to make sure we cover our costs. For those of you that are not familiar with, say, even the free books, please go get our books at wickedsmartbooks.com/podcast. I don't want you going to Amazon to buy them, but I do want to get them in your hands. WickedSmartBooks.com/podcast and we'll ship you out not just the books, you'll probably get a nice package in there as well. Also, for those of you that would like to have a private strategy session prior to the QLS Live event, just go to SmartRealEstateCoach.com/ActionPodcast. Now, that's pretty cool, guys, because we sat with 16 people in the boot camp Just a week or two ago. And at the end of that, the last day we do strategy sessions and we give metrics. And I'm telling you that the people that came in on the first day, Wednesday, left differently on after day 2 and a quarter. Why? Because that strategy session sort of sends them off on a path. Because each one of them said to me, yeah, I'd like to leave my job. No, I didn't nail my goals the last 2 years. No, I wouldn't be happy if I kept rowing in the same direction with where I'm going to be. So, so all of those things were out of their mouth at the beginning of the bootcamp. And at the end of the bootcamp, even though those were the things that were coming out of their mouth, they were like, I don't know if I want to get rolling yet. And so when I said, well, what if, and we did strategy sessions, it's a game changer. So we'd love to give you a free strategy session. Again, smartrealestatecoach.com/actionpodcast. All right, guys, we'll see you next week. Make it an outstanding week. It's your choice. Hey, guys, are you simply sick of juggling a dozen different software tools for your real estate business? I know I was, and I know I'm not a tech person, so it was frustrating. A subscription for this, you get a subscription for that, and they don't even work together out of the box. That's very frustrating, especially in the real estate world where your best time spent is going to be out in the field or on the phone with sellers. And now you're stuck hiring a tech guru just to make all that sync up. So let's ditch the chaos and let REI BlackBook handle everything. Automate your lead follow-up, track every deal, analyze things quickly for you, make offers all in one platform. In fact, with the Wicked Smart platform, we now have access, if you're in the Wicked Smart community, to all the other associates' properties. Can you imagine that? So you're brand new in the business perhaps, and your seller looks on your website and sees 20, 30, 40 properties, instant credibility. So you're going to get everything on REI Black Book from our custom workflows for lead generation all the way to closing. It has it covered. Try it today for just a buck. $1, guys. Visit smartrealestatecoach.com/reibb-dd. smartrealestatecoach.com/reibb-dd. All right. Thanks for tuning in to the Smart Real Estate Smart Real Estate Coach Podcast. If you got value from today's episode, guys, be sure to subscribe so you never miss a future episode. It literally takes one nugget to access some of the things we're doing. And when you're talking the amount of the size rather of the paydays, it's an opportunity cost that you can't let go. So don't miss an episode. And for goodness sake, share it with someone who needs to hear it. If you're ready to find your best path for getting started on your real estate investing journey in general, head over to smartrealestatecoach.com. We're going to help you take the guesswork out of your next steps. See you in the next episode.