Tim Bell funding your deals 5

Now the next one is corporate credit. Corporate credit is basically, I think, one of the best kept secrets in real estate investment. Okay, now I'm going to show you this diagram here. And this is a diagram of a typical small business. Okay? If you have a donut shop or a flower shop or a UPS store or, or a dry cleaners or some other kind of small business, maybe a small brick and mortar business, basically. You can see here that we've got the green line on this chart that looks kind of up and down like a roller coaster. That is the profitability line of a small business. So the business is open, they have two customers coming on Monday, Woohoo. And then you can see down at the bottom on Tuesday nobody comes in. Then Wednesday three customers come in and they're profitable again. And then Thursday nobody comes in. So that's that up and down. That roller coaster is the profit picture of a small business. Now let's contrast that to the expense picture of a small business. You can see the red line go straight across. That's the expense picture. For example, in this position over here at the left you can see maybe their rent becomes due. And then over here they've got to pay their employees. And over here they've got to pay the electric bill. And over here they've got to buy more supplies. And over here they got to buy more price tags or flowers or whatever for their business. Anyway, you can see that the profitability of a business goes up and down and up and down and up and down on a daily basis, whereas the expenses tend to be more of a straight line. The question begs itself then. How do most small businesses rectify that problem? How do they reconcile the difference between their profit, which is up and down, and their expenses which tend to be more steady? The answer is they use corporate credit. They use typically a signature line of credit to pay the bills when they're due, even though they may not be in profitability. And so what happens is their corporate line of credit becomes a put and take account for their business. So when they, when they don't have any profit available but they still have to pay a bill, then they use their corporate credit line to pay that bill. Then when they're back in profit, they pay it back down to zero. Then they pay a bill and they go in, they go in the deficit and then they pay it all back. So it's a put and take, put and take, put and take account that they use to operate and maintain their business. Well, just because you have a real estate investment Business doesn't mean you can't use corporate credit. You can, but understand that there will be special circumstances that will be necessary. Now there's three ways that you can establish corporate credit for your, your real estate investment business. There's actually more than ways than this, but there's three simple ones that I want to talk about. One of the ways is to go to a bank, establish an account, a checking account for your entity structure. You may have a C Corp, an S Corp, an llc. LLC is a very common. Now that'd be a good one for you probably. So you go down to the bank with your papers from your newly minted LLC and you open a bank account. Now in many cases they're going to ask you if you would like to have a line of credit with your bank account. Sometimes they do, sometimes they don't, but most of the time they do. So if they ask you that, your answer is going to be, yes, I do. So that's how you could establish that. Now that's the good news. The bad news is that you're going to have to pay. You're going to have to borrow money and then pay it back and borrow money and pay it back and borrow money and pay it back on behalf of your entity structure, your llc, S Corp, C Corp for two to three years before you can establish good credit. You also must create something or purchase something called a DUNS number. A DUNS number is a number that comes from a company called Dun and Bradstreet. Here's their website. You can see this, you can go on to Dun and Bradstreet's website and they will, they will provide that number for you. They will provide, they sell it to you, of course, because you're in business and everything costs when you're in business. Okay, but it's Dunn and Bradstreet and basically they will provide that score for you. Now Dun Bradstreet is the reporting agency for corporate credit or for business credit. Okay, we're all familiar with the personal reporting agencies. There's Experian, TransUnion and Equifax. They create your FICO score, which is your personal credit score. Well, Dun and Bradstreet is the company that keeps track of credit scores for businesses. That credit score for a business is called a paydex score. P A Y D E X A paydex score. Now Dun and Bradstreet will help you establish your DUNS number. D U N S number. And you can go on their website, you can get one and then Once you have that DUNS number, now you can ask all of your creditors to report to Dun and Bradstreet on behalf of your business. That way you start building your Paydex score. Paydex scores are go from 0 to 100 as of this recording, 0 to 100. And so you want to borrow money and pay it back and borrow money and pay it back and borrow money and pay it back on behalf of your business. Make sure that all of your creditors have your DUNS number and report to Dun and Bradstreet, in addition to reporting to the three personal credit reporting agencies, TransUnion, Equifax and Experian. Because whoever lends you money initially, a bank, for example, will typically require your personal guarantee, your personal credit guarantee on any money you borrow on behalf of your business. Now if you go through the steps, you get your DUNS number, you ask all of your creditors to report to Dun and Bradstreet and your paydex score will build up. It typically takes two to three years to build a paydex score to the point where it's, it can stand on its own. And then once your paydex score is high enough, you can eliminate your personal guarantee on any loans that you take. And now your corporate credit stands on its own. That's one way to get corporate credit for your real estate investment business. The good news is it's not that hard to do and not that expensive to do. The bad news is it takes two to three years to do that, okay? Now there are accelerated processes that you can use. The second one second process you can use to get to establish corporate credit is to purchase something called a shell or a shelf corporation. Okay? You'll hear them referred to as both shell, like the thing at the beach, you know that you listen to shelf, like the thing you have in your house where your little knickknacks are on it. Shelf. They're either called a shell or a shelf corporation. What you can do is you can go and you can buy those and you can see on the Internet here you can, there are places where you can buy those. And basically what they have done is they have created a credit score and they have created a, an aged paydex score for that entity. And then you buy that entity. You are now the owner of the entity, which means that you have that paydex score that is attached to that entity. Now there are people in our society who spend 2, 3, 4 years establishing credit for that entity structure, S Corp, C Corp. Llc. And then they sell Those aged credit score companies and you can buy one. Now that's the good news. Why? Because it's an instant process. As soon as you buy that corporation, you now have instant credit and you're ready to go. Bad news is they're expensive. Okay? It's kind of like almonds. Okay, we can all agree that almonds are more expensive than peanuts. Why? Because if you plant an almond tree, it's going to take you seven years before you actually get almonds from that almond tree. Okay? They have to wait. Well, it's the same way with an aged credit score company. Those people have had to spend that time aging the credit, borrowing, paying back, borrowing, paying back, borrowing, paying back and establishing that high paydex score. And then you can buy the company that already has the high paydex score. Since you're the owner of that company, you now own that high paydex score too. And you can start out right away again. Good news is it's instantaneous. Bad news is it's expensive. Okay? So you may want to go online and look for companies that provide that type of information. Now there's a third choice. There are companies that will accelerate your acquisition of corporate credit. It's cheaper than an aged shell or shelf corporation and it's faster than just doing it on your own. Starting out, opening your account, getting a paydex score or a DUNS number, and establishing a pay to score over a two to three to four year period. So it's kind of a hybrid. It's less expensive than an aged shell or shelf corporation, but it's more expensive than just doing it yourself. The do it yourself method that I talked about at first, establishing a bank account, etc. Okay, it's faster than establishing it yourself with a bank account, but it's slower than buying a shelf or a shell corporation. It typically takes two to three months to establish that. But for most people it's a pretty good, it's a pretty good solution. It could be a good middle choice solution. If you want more information about some companies that do that, let me know and I'll be happy to provide that information and put you together with one of those companies. Now they do have some specific requirements. I think typically they require at least a 680 FICO score at this point when this recording was made. They also have some rules about utilization of credit, how much of your credit balances you have in play and you've utilized. But I don't have all the exact details and all the rules right now. But if you want to let me know you want to contact me, I will put you in touch with those people so that you can. You can make arrangements for that, if that's a good choice for you.