Hey gang, Kris Krohn here. And today, I'm talking about how you secure the best
financing. If you're a subscriber of this channel and you're joining me on real
estate and the wonderful world of wealth creation then you know that financing
and credit is something that can be important whether it's yours or not. So,
check it out. Right out of the gate, there's two things that you need to
understand. In life, you can get what you want when credit is required by using
your own or by using other people's. I rent other people's credit on a very, very
frequent basis because your personal credit will only take you so far. Now, you
do need to understand that some people don't have a great financial situation.
And because of that, maybe they've already ruined their credit or they've
had some hiccups and glitches. And to be honest, it can take six months or a year
for some people to fix. Or if you're working with some experts they can
sometimes do it in 90 days. But that can cost you $500, $1,000, $2,000. And so, this
is the number 1 problem that I find that I just want to dress out the gate.
If you have a credit glitch or a credit problem, it's really easy to do nothing.
And you're just going to wait and hope that time heals. The reality is that sometimes
it will but often it won't. I want to encourage you to actually get your
credit scenario cleaned up and fixed right now. Because you might not even
know what you're going to use it for, you don't even know what the deals going to be.
But I'm just telling you, you're going to want your credit to be in good shape for
when the deal comes along and you need to be able to move fast. Now, with that
being said, let's just talk about when you're using your credit and then what
do you do when you're not. Because by the way, never allow your lack of credit to
keep you from taking action in your life. And I'm especially talking to you young
people or your old people. They're either saying, "I'm too young or I'm too old. I've
missed the boat." And I'm just saying that that's that's just bullcrap. That's a lie.
I don't believe any of that garbage. What do you need if you're going to use your
credit? Generally, this is what banks are looking for. Number 1, they want to see
that you have at least two working years in the same industry. Not necessarily the
same job but they don't want to see large gaps in employment. You know, they
usually don't want to see a gap longer than, you know, 3 months because you
could lose one job and get another job and... As long as it's a reasonable gap,
they'll be okay. You need to be at least 2 years in the
same industry. So, I could have sold cars from one place and then sold cars a
different place. I'm in the same industry. By the way, fancy fine,
you know, tiny a little bit of knowledge, is that if you're graduating from
college in a degree and then you get your very first job, they will count your
last 4 years or last 2 years of college as your 2 years in the
industry. So, it means that you can kind of get rolling right out of the gate and
something new like that. Okay. Now, so you want to have 2 years, number 2, you
need to work on your credit score. You need to have at least 2 or 3
credit cards, you got to use them responsibly, put stuff on them, pay it off
and never carry more than a 30% balance. What does that mean? I'll break it down.
If I have a credit card that has a thousand dollar limit, then in general, as
I'm using that card, I should never keep a balance greater than $300 on it. Which
means, at the end of the month if I have an $800 balance, I should pay 500. So,
drops it back to 300 or better yet just have it paid off. Frankly, the purpose of
those credit cards is to help you show banks that your credit worthy. So, please
do not get in the trap of using a credit card for the sake of building credit and
then getting trapped in buying yourself some stuff that you can't afford. And so,
at a later date, you're just going to hope that bla, bla, bla, that it'll all work out.
Don't do that. Keep it paid off, use them responsibly,
they're going to want to see 2 year credit history. Some banks will want 2 credit
card lines of credit. Some will want 3. So, the advice that I'm giving
today is 2 years in the same industry and then number 2 is make sure that
you actually have 3 credit cards that you're just using responsibly. If
you do that, banks are going to like what they're going to see. Now, the last thing
that you need to know is whether you're an entrepreneur or you work for somebody
else. In other words, you have W-2 income or you have k-1 income. Now ,if you have a
job and work for someone, every year they're going to issue you a w-2. That's
what you're going file on your taxes if you live in America. And they'll
basically say, "Oh, your company that paid you this money is reporting they pay
this money." Why do they report you? Because if they didn't, they'd have to
report that they made the money and kept it and give and give it to you. And
they'd have to pay tax on it. So, they're saying, "Dude, yeah. It's your tax liability."
But if you're self-employed or a contractor, you're going to basically
file a K-1. It's the equivalent of W-2. You're basically saying, "That's how much
money I made in my business this year." Just so you know, in the world of banking,
W-2 and working for one else, that's really easy stuff to
prove with banks. But if you are self-employed they want to see 2 years
of tax returns and they're going to average out those 2 years and they want the
second year to look better than the first year or at least the same. But not
declining. So, friends that's what it takes if you want to be able to use your
credit to qualify whether it's for a car, home or anything business. The second
workaround though that I want to give you that I use all the time is, "What do
you do when your credit gets maxed?" Okay, what do I mean by max credit? Well, banks
what they're doing is they use credit scores and your credit report basically
as a way to evaluate risk. How risky are you? Like if you look at my credit report,
you'll see that I've got this debt and that debt and this debt and that debt
and banks will say, "Well Kris, looking at all that debt, that's a certain level of
risk." Now, we look at your income when we say, "You got it covered, that's awesome."
But at some point the banks aren't going to be generous and keep giving me
options for more and more real estate. At some point they're going to cut me off and
just say, "Hey, you know you've hit your 10 home limit and you know, Now you've
eliminated 90% of banks." Because they typically don't want to do any kind of
lending or portfolio lending more than that. At some point, you're going to hit the
wall. You might hit the wall. Right out of the gate, you might be out the wall or it
might take you a while to hit the wall. What do you do when you hit the wall? Or
even before you hit the wall like I do? I rent someone's credit. If I'm doing a
real estate transaction. For example, and I have a partner bringing money to the
table to buy it. And let's say they can't use their credit and I'm the one that's
going to make the whole deal happen because I'm partnering with them. I might
bring in someone else as a credit partner and say, "Hey, we'll give you a
couple grand up front, we'll give you 5% one of the profits when the
deal sells and all we're going to do is rent your credit. You're going to get paid
for using your credit." Now, number 1, is this legal? Yes, if you have the right
entity structure and setup, this is totally legal. So, one of you is going to ask
that question. And basically, like, so, I just bought 3 homes, I used someone
else's credit to do it. I just picked up two more partners. We're buying 2 homes
with each of them in the next 6 months. And 1 of the 2 needs a credit
partner. I've already lined it up, it's super easy to find. I've got some videos
that talk about how to do that but if I were to give you like just a real quick
little bonus, I would say, if you know the numbers of the deal and you know what
you stand to gain, ask yourself. What are you willing to give up for some
else to come into the deal and basically use their good faith credit? If you go
out into social media or into some of the investment circles or the Ria's, you
can go out there and basically say, "Hey, I got this deal, here are the numbers. I'm
looking at renting somebody's credit. Bringing on a credit partner. You don't
have to bring any money to the table but you have to look good to the bank. And
dot, dot. And if that looks good then basically, here's what I'm willing to
give you for bringing your credit to the table." And friends, that's the whole deal
here on on financing. I hope this was useful for you. Hey, thanks so much for
watching today's video. And for taking a walk in the park. I hope
some of this nature brought some of the calming influence into your life that I
know it certainly does for me. If you enjoy this, make sure that you subscribe.
And if you're ready to get cranking on some real estate investments, I got News
for you. You can join me, the link below on my website and I'll actually share
with you what some of my deals are. How to get involved with our real estate
investing community. And when you got credit or especially if you got no
credit, I'll show you how to do no money down and no credit deals. And it's going to
be awesome. We're going to have a walk in the park,
we're going to make great money and it's going to be awesome. See you there.