CW 456 – Erik Gantz Senior – Accessing Business Credit for Real Estate Investments with Partner at SeedCapital.com

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Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before and a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Hey, welcome to the Creating wealth show and Merry Christmas Eve. I know it's Christmas Eve. I don't know when you're listening to this, but that's when we're public. This is your host, Jason Hartman and it's great to have you with me for episode number 456. And today's episode is going to be a pretty good holiday gift for you. It's Eric who's talking about business credit. This is a pretty interesting deal. I've looked at a lot of these things over the years and a lot of them I felt were kind of not that reputable. The companies they were coming from. This guy was referred to me. I saw him speak. I know many people that know him. They are a real company with real offerings and real help here and real resources. So I wanted to bring him on the show again. I have never done this topic before. We may have him at Meet the Masters. They're pretty close to confirming either Eric or one of the members from his company at Meet the Masters. And I'll tell you, Meet the Masters is jam packed with content. Like I said, this is a totally new Meet the Masters. A lot of new speakers, great speakers. We really wanted to change it up and get you some new content this time. So I know we have a lot of regular attendees. So I just had a feeling you were getting a little antsy and wanted to see some new stuff. So we've got a lot of new stuff. And remember the theme of this Masters is alignment and and empowerment. And let me tell you, we are working on something that is so cool. It's not another Ten Commandments exactly, but it's the Ten Commandments on a niche concept. The Ten Commandments of Alignment and empowerment. Because my belief is that if you get your agreements and your business aligned, you are going to be a massively empowered investor. So again, this is going to be without a doubt the best Meet the Masters we have ever done. Be sure to get your tickets for that. We are not completely sold out yet, but I know we will be soon. And I know everybody always waits till the last minute and you pay a higher price waiting to the last minute. You're paying a higher price for your airfare. You may not get in the room block on the hotel and the ticket price goes up as we start to sell out. So go to jasonhartman.com get your tickets. Our guest today is talking about business credit. Let me tell you about a couple of the upcoming shows. On Friday, episode 457, we're gonna have Michael Zuckoff, who has done the most extensive research into a guy you've definitely heard of the Social Security system and Bernie Madoff made famous. And that is none other than the Ponzi scheme. Yes, the Ponzi scheme. He's gonna talk about that. He's a. He did extensive research into the life of Ponzi himself. And so we're going to hear about that and that'll be great. Monday's episode, I'm planning to just talk to you about some of my own stuff or do a market profile. We've got some great new local market specialists presenting for the first time at Meet the Masters. We're going to be presenting Chicago. Yes. Can you believe it? We have done a little bit of business in Chicago. Well, not Chicago proper, but the Chicagoland area. The areas that are landlord friendly and that makes sense from a cash flow perspective. We are going to have a local market specialist from Chicago presenting at Meet the Masters. We've got some good new areas being presented, by the way, too. So not just new. You know, we always have sort of two types of speakers at this event. We have the content speakers that talk about taxation, asset protection, creative things that you can do with your ira, all kinds of cool stuff like that. And then we have the local market specialist. So we've got a bunch of new people on each of those. We've got some of the regulars, too, but some really new, fresh content for you. So I'm super excited about that. And then episode 459, I think we're gonna switch that up. We originally had Robert Carr slated for that episode and he's CEO, Heartland Payment Systems, a great foundation that's doing some great work and wanted to talk to you about the new currency Apple Pay, how that affects the economy, what that means to the velocity of money, something economists talk about a lot. So I may switch that up with a fantastic client interview and case study that I just did. So I think we're going to do that and we're going to have our client David Porter on for episode number 459. And then 460 is a tenth show episode. We're gonna have the very famous author. You've definitely heard of this guy. He's big Daniel Pink, who's written a ton of books. You know, one of them is Drive Another A Whole New Mind Free Agent Nation. Just Daniel Pink has got some fantastic work and he's also host of, of a new National Geographic or Nat Geo show called Crowd Control. He's a contributing editor to Wired magazine. In Crowd Control he does all these interesting psychological experiments. You'll just love it. Really neat stuff. 462, we've got Mark Meckler scheduled who's talking about self governance and the Tea Party Patriots, the economy and what that means. 463 and these are all subject to change, but this is what the lineup is looking like. Ashley Ebling is going to be on from Forbes magazine talking about funny wrinkles in the tax code around the country in different states. And I liked her article talking about New York's 164%, if you can believe that, estate tax. So that's going to be interesting. And then I'm going to be on for 464 talking to you about some of my stuff and some market profile stuff. And then 465, Dr. Ben Carson, who's a neurosurgeon who is going to talk about one nation saving America's future. And today I had the pleasure of interviewing the very renowned Peter Sage. He's got a lot of awesome content. He was the youngest coaching client Tony Robbins ever had. He's been involved in 25 businesses. One of them that is getting closer and closer to the whole concept of solar power being generated in space and this, this energy being beamed back to Earth. The sun never sets an Earth orbit. The efficiency of solar energy in orbit is, is unbelievable. Really. So we have got some phenomenal shows coming up and there's a bunch of others I haven't even mentioned because I can't remember them because I don't have them in front of me and I don't have them all written down. So some really good stuff coming up for you. Without further ado, let's just go To Eric. Let's talk about business credit, how you can buy properties with this stuff, get zero interest for the first 12 to 18 months. You do need a FICO score because this isn't solely written on the business, but that makes the terms a heck of a lot better. So I think you're really going to like what you hear here. Be sure to go to Jason Hartman.com, check out the properties there. We've got a bunch of great properties. And then register for Meet the Masters so you can learn about land contracts, asset protection, taxation, some great new market areas that we have and some new local market specialists will be there. We're just going to have a lot of fun at that event, so look forward to seeing you there. And here is Eric. And let's talk about business credit for real estate investing. Hey, it's my pleasure to welcome Eric Gantz. He's an expert on business credit. And why are we talking about business credit? Well, the reason is, is that some real estate investors are using this successfully as a way to acquire more properties. They can acquire notes with the, with the money. They can acquire land contracts as an investment and just do some interesting arbitrage type stuff. And we're going to dive into that today. Eric, welcome. How you doing?

I'm doing great. Really appreciate you having me.

Yeah, well, it's good to have you on the show and I saw you speak recently at a conference I attended and really enjoyed your presentation. I have followed this idea and this opportunity for several years, but I never really dove into it and I kind of felt like some of the people offering it wouldn't really keep their promise and deliver on it. But you, you struck me especially because you came as a referral and I know people that are doing your program. You came much more highly recommended with a lot more credibility than some of these others I've seen out there in your field. And you know, every field has its share of hypesters and you know, promoters that probably don't deliver on half the stuff they promise. But you know, your, your presentation was, was sound and it was, it wasn't a bunch of hype. And, and so I liked that and the fact that you were, you were referred by someone I trust. So tell us a little bit about business credit, if you would, and how it could be a good opportunity for investors.

Sure. So just real quick to kind of touch on what you were saying about the business credit space. You're 100% right. There's quite a few outfits out there that will promise you the sun Moon and the stars and tell you that business credit is the ultimate panacea to financial freedom and all this kind of stuff which if done correctly, you can get there. But unfortunately it does take a lot of time to build business credit. You have to have a very profitable business to have standalone business credit. So what sets us apart is that we actually use a combination of personal and business credit and to sort of leverage the personal credit to co sign for the business in a sense. So just like when you're a 12 year old or 15 year old kid, you can't get your own credit card, but if you have mom and dad co sign for you, you can then start building your credit by leveraging their credit. So from a top line perspective, that's essentially what we do at our company is we use the business owner's good credit rating to kind of kick start the credit building process to generate that initial capital and then to then create that business credit profile for the company, which down the road would be its own standalone credit credit generating entity.

Okay, so what, what, what does this do for an investor? I mean, say they've got, you know, relatively good credit, they've got a FICO score, you know, maybe 680 or above. I don't want to say they're 720 and perfect, but you know, they can get some financing for properties, we know that. And this is always subject to change because it is a bit of a moving target. But we know that, you know, Fannie Mae and Freddie Mac, the agency loans on the conventional side, basically limit you to 10 loans for as a total. And if you're married, you know, each spouse can get 10, but maybe the other spouse isn't working and there's no way to qualify for those additional 10. And so investors really do get kind of tapped out unfortunately, and they, they want to build a larger portfolio. And there are some other sources we refer them to that are kind of non conventional sources, whether they be hedge funds or private equity groups or just private lenders like myself. But what, what is this going to do for a real estate investor? What, what will it offer to them?

Sure. Well, what we find is the conventional loans are great, hard money loans are great. But the biggest gap that we find that we're filling is that anywhere between 20 to 30 to even some cases 40% down that you need in order to secure that conventional or hard money loan. So that seems to be the biggest challenge is that we worked a lot of times with more novice investors. Not to say that our, our funding program isn't well suited for the very seasoned investor. But what we see a lot of is people, they find this property, they can easily qualify for a mortgage if they only have that down. So we use the business credit process to procure funding so that they can put money down to secure that mortgage behind the down payment. And then obviously, the more money they have, the more houses they can buy, because the more down payments they then have. So what we're finding is more often than not that the buy and hold investor is using this as the 20 to 40% down that they need to secure another loan behind that. As far as from the flipping standpoint, we do find that the flippers use the funding to outright purchase a property, hold it for the time period they need to flip, and use that same pool of funds to do the renovation, and then once they complete the renovation, sell the home, they're able to pay back those lines and then do it all over again. So depending on, you know, depending on which direction you go in the real estate game would kind of determine the strategy that we would help you do.

Right, Right. Okay. So one of the things people are going to be wondering is how much credit is available to them. And you had previously talked about the $180,000 number. What's that all about?

So what we're finding is that people with good credit scores that do qualify for a program, they're averaging in our real estate pool anywhere between 100 to 180,000 in initial funding when they first start out, because there's only so much funding that we can get at the very onset of our program. So again, it's FICO based. It's also going to be based on geography and which banks we have access to. A lot of the banks, a lot of the really nice regional banks have just that, which are regional footprints. So if you're in a particular state, you have to kind of go with the banks that you have access to. So that will kind of determine just how much funding we can get. So, you know, 150 is kind of a rule of thumb that we use. That's probably a pretty good number to use as an average for what each individual is getting.

$150,000.

About 150,000.

Yeah. And really, it's not an individual. It's their business that's getting that right.

Correct. It's the individual and the business, initially.

Okay, yeah.

And then obviously we can leverage that up too by adding a spouse. So we have a lot of married couples that go through our program and they're able to double up. So they can, instead of getting 150 just for the husband, the wife comes on board, put her through the program, she gets another 150. Now they've got 300,000 to go invest and you can bring on. It doesn't have to be a spouse, it could be a partner, could be a family member. So anybody that would be interested in procuring funding for the use of investing in real estate that has good credit would be who qualifies for this type of a program.

Okay, and what happens, the benefit here is that the business credit does not show up on one's personal credit report, right?

Yeah, that's correct. And again, you have to, you have to know what you're doing because some business credit does. So it's important that you choose the right business credit because if you choose the right business credit, it's what we call stealth. So those, those lines are held in the business name and they're off of the personal credit profile of the business owner. So even though you could have $100,000 that you're sort of co signing for your business, that will not appear anywhere on your credit report. And so when you're trying to go do things with your own credit is, you know, such as purchasing a home or buying a car or doing anything that you need that won't be, that won't be affecting your debt ratio.

Okay. And so the debt does not show up on your personal credit report if done properly. So that's a benefit. But by the same token, the repayment of that debt doesn't show up on your credit report. So it doesn't help your credit score either, right?

Well, yeah, again, when we first get.

Started, it's sort of neutral, I guess.

It is neutral. And there are some of the, some of the lines that we establish will report to the personal credit. So our goal is after the first year of working with a particular client is to get as much as about 80% of that off of the personal credit report. So if you've got say 100,000 or 150,000 and we can get about 80, 80% of that off, you're looking about having maybe 30,000 of that reporting to your personal credit. And again, that, that is actually going to help your credit because that's going to increase your debt capacity and it's going to give you a lot more depth as far as from the bank, bank's perspective.

Okay, so, so, so what happens here? Take us through the steps of doing this. Would someone like a lot of our listeners have existing entities, they have LLCs, they might have a corporation, they use them to hold real estate and so forth. But maybe they don't. They need to set up a new entity. Is that correct?

Yeah. So the first step would be obviously to create an entity. We have a saying that there's no business credit without a business. So obviously we've got to get an entity in place. And I would caution that if, if people or your investors who are listening, if they already do have an entity, one of the first things that we do is do a little bit of a due diligence process on the entity just to make sure that there's not any bad credit already outstanding with the business. Because a lot of times.

The credit reporting agencies for businesses will actually generate a credit profile without the business owner even knowing it. And there could be some skeletons in the closet that you really don't want to try to fix. Because fixing business credit is very difficult. That's why what you want to do is start fresh and make sure you're doing it the surgical, systematic way so that you're not going to have any issues down the road.

But the beautiful thing about that is to start fresh. It's not like you have to do anything except create a new entity. I mean.

Correct?

Yeah, that's so easy to do. I mean, you can create an entity for, you know, for very little money and it's very fast to do it. Now can, can they create this entity in any state or does it need to be in the state in which they live? Or you know, like there are certain very desirable jurisdictions for asset protection and so forth. Is that just optional or some states better than others for business credit? Because that's a whole nother dimension to, to the thought there.

That's a great question. As far as, from the business credit perspective, no, there's not really going to be much benefit. But as you were alluding to earlier, as far as from the asset protection and some of the non disclosure of various states, that's definitely going to be a plus. But specifically when in the context of business credit, there's really no benefit incorporating in a state like say Nevada or Delaware, as opposed to your home state.

Okay, so but if you want to actually run that business, then it does become an issue. Okay. So yeah, you know, the business will have its credit. That's only one aspect of, of the business, but it'll also have its business. And, and you may want, you know, good asset protection there and you know, tax benefits and so forth. So can you, I'll ask the question differently. Can you create the, the entity in any state?

Absolutely. Yeah. So it doesn't matter.

So you could live in, you know, the Socialist Republic of California. You like to. I threw that in. And you could, you could create the sentence entity in Nevada, Delaware, Wyoming, Alaska, wherever. Right?

Correct. Absolutely.

Good, good. Okay, so that's great. It's good so far. What else we got?

So we're going through the steps.

You create the entity.

Yeah, yeah, so we'll create the entity and then the next step is we need to take a look at the personal credit of the business owner. And again, you alluded to a 680Fico. That's, that's sort of the ballpark that we want to see. We have a, what's, what we refer to as a window dressing process. So there's a lot of tricks that you can, that you can do to a credit report to get the score to bump 10, 20, even 50 points just by kind of moving some balances around, making sure you don't have any old paid collections still reporting. So I'm not going to go as far as calling it credit repair. We call it window dressing because it's not really credit repair. It's just kind of pretty up the credit as much as we can before the bank takes its snapshot. So once we go through that process and the client is ready to go to applications, we then design a bank application strategy. So as I mentioned before, depending on what state you're in and what banks you have access to, we'll typically apply to about six to eight different banks and we'll shoot for 20 to $25,000 per bank. And that's what gives us our aggregate amount of funding. So the reason that we're able to get that much funding right out of the gate is we don't go to just one bank and ask, hey, can I have $100,000 loan? Because they're definitely going to say no. So we go to a collection of banks, say six banks, ask them each for 25, which then allows you to not only diversify that basket of risk over a variety of lenders, but anything under 25,000, the banks typically will go stated income with it. So your documentation requirements are much, much more simple. So it's very much just a FICO driven type of application at that point. So once the applications are submitted, they get underwritten, the lines are approved, then we consult with the client and kind of figure out what the strategy is for investing that money. So obviously with your audience, we're Talking real estate. So as we were talking about earlier, if they've got a buy and hold mentality or strategy, then we'll tailor the program to accommodate that. If they're flippers, then we'll help them use the funds to that end.

Okay. Okay, good. And you said it was very hard to repair business credit. Is that because that's all done through a D and B or Dun and Bradstreet report, rather than, you know, Experian, you know, Equifax, et cetera, for the personal.

That's one part of it. The major bureaus are actually starting to get more and more involved in business credit and reporting. Business credit Equifax is probably the leader right now. I would say that they're actually even stronger than Dun and Bradstreet. Dun and Bradstreet is definitely still the name and what most banks will use. But Equifax, in my opinion, has a much more robust report and does a little bit better, really kind of outlying the health of a company's credit. But that's a discussion for another time.

The main reason why business credit is difficult to repair is because there's not a very comprehensive law like the fcra, which is the Federal Credit Reporting act, that protects consumer credit. So there's nothing like that, that protects business credit. So if you've got errors in your credit report or you've got mistakes that you've made in the past and you've made late payments and things like that, there's really not a process that you can go about fixing any of it. So it's just sort of. They just, they just report it. And if it's, if it's not accurate, or if it is accurate but you have an explanation for it, there's really. You don't have a forum like you do with personal credit to repair it and to make sure that everything is reporting accurately. So that's, that's the challenge behind why business credit is difficult to repair.

Yeah. Okay. Okay, good. So just set up a new entity. Now, what's to limit someone of, you know, just setting up 10 or 100 or 1,000 entities and getting the same amount of credit for each one. I mean, it sounds like they could be rolling in cash. Or is it not that simple?

Yeah, there's always a catch, right? So the catch here is that, you know, what we're doing is we're co signing for the business in a sense. Meaning that you're still tying your Social Security number and your good personal credit rating as a condition to getting that business credit. So although it's not reporting to your. To your personal credit, you still are personally guaranteeing that those funds will be paid back. And so that's why if you were to set up 10 different entities, once you go to submit the applications, your social is going to be involved with that. So they're going to be able to. The banks will be able to determine that you've already got money out.

Okay. Okay. So how do they determine that though they don't see it on your personal credit report?

Well, there's only a finite basket of lenders that offer this type of a product.

Oh, that's how they.

Yeah, exactly. So they may not know that you've got money. So B of A might not know that you've got money out with Chase and City, but they know that you've got money out with them.

Right. Okay, makes sense. Yeah, makes sense. Okay. What else does someone need to know about this? Just questions. I haven't asked you that I should have asked.

Well, one of the benefits to our program is that all of the lines that we establish are 0% minimum for the first 12 to 18 months. So.

It'S a really awesome tool for the business owner in the sense, especially in a real estate investing environment, because you're able to borrow that money at that 0% and you use that great word arbitrage. So you're able to arbitrage that interest and keep more money in your pocket so you can borrow other people's money, borrow the bank's money, use it at 0% and go buy a property, renovate it, flip it, and don't have to pay any money in interest. And so there's also additional techniques down the road that.

We can help them keep that 0% interest ball sort of spinning somewhat indefinitely. And again, it's a very surgical process that you have to do everything right because it's somewhat of a domino effect. If you do one thing wrong.

It could create additional issues down the road. So the one thing I would caution is that whether they work with a company like ours or another reputable company in the industry.

The value of working with somebody that's done this, say 10,000 times and understanding all the different pitfalls and helping you avoid them and being able to, to do this from A to Z flawlessly, it's really worth its weight in gold. Because. Because again, if you, if you're accruing interest or if you're doing things that, that aren't in line with what the banks want. Exactly. And reallocating Your business, your personal credit to business and things like that, there could be some negative consequences if you don't do it the right way. So I always tell the DIYers that are trying to do the business credit thing is find a really reputable company, get a referral like you did, and.

Use that expertise. Because trying to do this on your own and figure it out on your own is a very, very difficult process.

Okay. So I get really cautious when someone can't guarantee something and they want me to pay a big upfront fee. Sure, tell us about that. I mean, you basically. Would it be fair to say that you act as a business credit consultant? Is that what you might call yourself?

That's 100% what we are. We're not a broker. We don't collect any points for helping clients obtain funding. We 100% work in a consulting capacity. So we're just giving the clients access to the vast knowledge that we've been able to amass over the years on procuring this type of funding. And with our particular program, we actually don't have any fees up front for the funding, so, meaning we have a guarantee in place. So that's to say that if we have a client that qualifies for a program and that we can offer them our guarantee that we don't charge any fees for our program unless that minimum guaranteed level of funding is met, then and only then are we compensated. So it's 100% performance based. Meaning that if our standard guarantee is $50,000 in new business funding, and if we get you $49,999, our service is 100% free and you're able to take that money and use it anyway, so it's still yours to keep.

Okay. And how much does your service cost? If it all works fabulously, we will.

Charge 34.95.

For the $50,000 guarantee. And again, because of the fact that we don't work on points or success fees, as some other companies may call it, we basically charge the flat fee and we go for absolute as much funding as possible. So we're not freaking the client out thinking that they're going to have all these backend fees if we get them 100, 150,000 in funding. So it allows us to really, to really go out and help the client procure as much capital as possible and keep that fee to them as a proportion of the funding down to as little as possible. As little as 1 to 2% in some cases.

And I just want to stress again to the Listeners that you can use the money for anything you want. You can buy houses with it, you can use it to invest in land contract deals or you can do hard money lending with it. You can, you can do whatever. And it's 0% interest for how long?

So it's 12 to 18 months. And again, it's a bank by bank determination.

That's why you say 12 to 18 months. Okay, correct. And a lot of these zero interest upfront deals, the, the part where people do get burned on them is when they go past that amount of time by just say one month and they're back charged all the interest that they got for zero. Does that happen in this case or is that a bank by bank also?

No, that does not happen at all. So across the board, that is not the way that the interest is calculated after that interest free period. So there are some funding or financing products that I'm aware of what you're talking about, where if you even have $1 left on the line, they're going to charge you interest back to $1.

Yeah. Or one day over too.

Correct?

Yeah, yeah. So either way. Yeah. Okay.

No. So what happens is after that 12 to 18 month period, whatever balance is left, if any, on that particular line, interest begins to accrue that day on that amount period.

Wow, that's a pretty awesome deal. And basically this is just like a, you know, a credit card balance transfer type of thing for the bank, right? Same idea.

Yeah. So they're unsecured lines of credit. So there'll be lines of credit that come with, you know, you could use as plastic or you have checks that you can write against as well. So what we do is if we help someone get, say like the scenario I was explaining before, let's say six, six lines at 25,000 a piece, you've got 150 in funding. What we'll do is we'll just liquidate, since it's at 0%, we'll liquidate all the lines, put all that cash into an account in one lump sum and then you've got all that money that you can just write checks against in the form of cash. And it's a beautiful thing. And then we set up auto payments for the lines and we put aside a portion of that money, again at the 0% money to pay back those six lines for the monthly payments. And so it's money in money, or excuse me, money out money back in. So you're actually not having to service that debt with money out of pocket, but using that same 0% money to service the very debt. So it's a beautiful thing.

And so your fee, if they get $150,000 worth of credit, it's equivalent to three points at zero interest. I mean, that's an awesome deal.

Yeah. And that's why we've found such success in the real estate space. We actually got started primarily in the franchise industry in helping franchisors sell more units to franchisees. And so we then were looking at some of the other verticals we can get into and found that real estate was a very, very good fit for what we did.

Yeah, yeah. You know, I'm a hard money lender, a private lender, and so are a few of our clients. They loan through our network to our providers and gosh, if they all find out about your program, then they're not going to be borrowing money from us anymore.

Well, really it's only 150, 50,000. And they need a lot more than that to juice their business up, you know.

Absolutely.

They need to roll, you know, 800 to thousand to a million five per month easily. So, yeah, that's.

Well, what we found though is that we've, it's, instead of working in competition with hard money lenders, we actually work in cooperation with them quite a bit because you still need that 30% down on average in order to get the actual hard money portion of the loan.

Well, fair enough, fair enough. So, yeah. That they can use this portion for some of their down payments.

Yeah, correct.

Okay. Okay. So what is the, the minimum credit score? I mean, people do need to be concerned about their personal credit scores. And you know, certainly we have listeners. I mean, millions and millions of people did this during the financial crisis. They just decided it was the best, most prudent decision to walk away from properties. And so it bashed up their credit. And you know, they're, they're cash buyers now or they're hard money buyers when they're investing in properties and things are coming back. You know, their credit report is looking better and better, but you know, it's not back to perfection. What, what is really the minimum FICO score? Someone can have to take advantage of this opportunity.

Okay.

I mean, maybe there isn't one. It comes with a lot of this and that and if, but you know, give us an idea.

Absolutely. So yeah, as you were saying, score is simply sort of a barometer of your credit health, so to speak. So there's a lot of things that influence the score and it's really that there's specific influences that we look For So as far as in the real estate space, yeah, you're right. A lot of investors, they decided to go the strategic default route because it was the best thing to do.

And I can't blame them at all, you know?

Absolutely not.

I think sometimes it makes a lot of sense, you know, at some point, you know, when, you know, like these people that bought properties in stupid places like California or Miami or New York City or Boston, you know, these are places we never recommended. Okay. You know, they didn't do this stuff through us, but, you know, they, they were so underwater and their cash flow stinks. It just was a smart decision to walk.

Okay, Absolutely. I agree 100%. And if I were I. Fortunately.

How.

Much is a credit report worth exactly?

And that's the thing, is that what we found was with a lot of the real estate investors that we work with now is they kept their credit pristine aside from, say, a few strategic defaults.

Right, right.

And in the case of what we do, because it's not a same industry derogatory, because you're always going to. Banks are always going to weight what type of credit you're applying for much heavier than any other types of accounts. So we've actually been pleasantly surprised to see that banks have been rather forgiving, given just how crazy it got with how many people ended up going through foreclosure or short sales.

That's a super interesting point. See, if someone's loaning you money for a mortgage and you defaulted on another mortgage, they don't like that too much. Okay. But if they're loaning you money for business credit and you default it on a mortgage, it's not quite as bad.

Correct. And if you kept all of your, you know, your lines of credit and credit cards in perfect order and never made a late payment and only had those strategic real estate defaults, we're finding that there's. The banks are quite forgiving and we're able to get just about the same results. Even. Even if they've got some foreclosures or short sale issues on their credit report, the only thing that we do look for is that the short sales or foreclosures need to have been seasoned for at least a couple years. So if those were two years in your past and the rest of your credit is great, we'll be able to help you out all day.

Okay. Okay. Good. Good. So did you have a number on the score or you just don't have.

Yeah. So 680 is typically what we like to. That's the General number that we give. But I've seen in so many instances where people have scores in the low sixes because They've got a $50 open collection from a medical bill that they didn't even know that they had.

But they're not going to come in and do this opportunity if their score is 550, right?

Yeah, correct.

So as I mentioned before, there's reasons why the score is being dragged down and it could be something as stupid as $50 open collection, which is going to have a hundred point swing on your score. So if you've got a 720, got this open collection on your accounts, reporting all three bureaus, but the rest of your credit is fantastic. You could be sitting on a 620. We get that thing paid, remove it from your credit, and all of a sudden you've got a 720 score again. So.

What we look for is relatively clean payment history over the last two years. We really have a difficult time dealing with bankruptcies. So bankruptcies, if they're still reporting a credit.

I know, and let me explain that to the listeners. See, this is unsecured loans. So a mortgage lender will not have as much of a problem with a bankruptcy, oddly, because they've got the security of the property, whereas an unsecured lender. Bankruptcy is a big hurdle because they just get wiped out.

It is, yeah. Because there's no recourse for them. There's, there's no assets.

But, but in a way, you know, it's kind of counterintuitive too, Eric, because if you filed bankruptcy, you can't do it again for what, seven more years? Right. So a lot of lenders view a person who did a recent bankruptcy as, hey, this is like a fresh new. They got a clean slate, you know?

Yeah, that, I mean, that's definitely one way to look at it.

Not your guys, though.

Yeah, Banks. Banks aren't always the most rational entities. So, you know, they do things a certain way and, and unfortunately, that's how they do it.

Okay, well, this has been very educational and I want to thank you so much for joining us today. And if you have more questions about this, folks, contact your investment counselor at my company through the jasonhartman.com website and we'll get in touch. And we may have either you or a representative from your company speaking at our upcoming Meet the Masters event. That is unconfirmed. So I didn't want to talk about that too much, but I just want to say it's a, it's a maybe. And I know you've got to clear some dates with your calendar and see if it works for you. So I hope it works.

Yeah. We're going to do everything in our power to make sure that either myself or one of my colleagues can be there to field any additional questions that your listeners may have.

Excellent. Thank you so much, Eric.

Well, thank you so much, Jason. I appreciate the opportunity.

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This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email mediaartmanmedia.com Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.