Leo Clark talks to us today about the benefits of community banks and credit unions when you’re a small business owner.
Learn more about how having a line of credit for business needs such as operating costs, marketing, rehabs, overhead cost, and more can help give you quick capital for times you need it.
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Leo: Hey, everyone. Leo Clark here with CREST Investment Group. I am the host of the REI Classroom today. Today, we’re going to be talking about business capital.
Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.
Leo: One of the things for me in my business is building a reputable, very, very attractable and viable business. One of those aspects of that is the capital, the money side. I’m always looking for business capital outside of my projects. So take that and put that on the side over here for what you have to raise for your projects.
What you have to raise for operating capital or for anything within your business of what you need to be doing, for instance, office lease, hiring people, marketing, anything that has to do with your business. It always requires money, capital.
So raising business capital is very viable piece to what you should be doing. It’s very important. What you need to be looking at is how to go out there and get it. Doesn’t matter if it’s $5,000, 10,000, 15, or $100,000. You want to go out there and you want to find business capital, operating capital.
So one of the main pieces I like is community banks. Community banks are very, very pro-active in helping small business. Because you’re a small business, you’re an entrepreneur and you need to have operating capital in some aspect.
The best way is to basically go into the community bank, start the checking account. You’ve got to have a checking account in order to get the money funneled into an account that you need to be paying the bills with. So you have a community bank, you got the checking account with the community bank, and this even works with credit unions. Credit unions are very pro-active for small business owners.
You want to be able to know those people inside that bank and understand who they are and what their position is. You visit them regularly. You try to network with the people inside that bank to understand what it is they can do for you. Because one of the things that you’re going to need eventually is small chunks of money, 5,000, 10,000, 20,000. You can start out with lines of credit through community banks and you can build your business from that aspect.
So the smallest I’ve started out with was about 25,000 or 35,000, somewhere in that area. And then I built it up to right now I got three lines of credit, three different community banks, all at 100 to $125,000 each, and is sitting on the sideline for me to use at any given time I would need it. So if it’s a high earnest money deposit I need to put on a property, I’ve got it. If it’s something I need to pay for marketing, I’ve got that. If it’s something that I need to buy another computer or anything for my business, I’ve got that money sitting on the sideline and accessible at any given time.
Of course, they’ve got high interest rates on a lot of these, but if you get in with the right bank, you can get a very attractable interest rate somewhere between four and six percent is what you’re after. So right now with my lines of credit, gives me a little over $300,000 of accessible business capital. I’m about six percent on the majority of it. A couple of them are four and a half, and five.
But one of the things that I am always looking for is that better interest rate. So if someone is out there advertising, we’ll loan you up to a 125,000 at four percent. I’m always wanting to apply or know about how to apply for that type of loan.
The business lines of credit is what you’ve got to focus on. So for your business, you’re an entrepreneur, you’re a CEO or a president of a corporation, you’ve got to run it like a corporation. And all corporations out there, all businesses out there, have business lines of credit with banks somewhere.
So again, as the host of the REI Classroom, I urge you to go out there and build your business and put in for those business lines of credit. Again, Leo Clark at CREST Investment Group. See you next time.
Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.
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