In life, you have two choices. You can build a lifestyle or you can live a bullshit life, but you can't do both. Welcome to the “Freedom Lifestyle Experience”, where we focus on building the lifestyle you want—and now, here's your host, Michael Burns.
(00:16): Welcome back to the freedom lifestyle experience. I'm your host Mike hope. Everyone's having a great week, beautiful day in salt lake today. We're getting a little early spring. And then it's gonna be snowing again tomorrow. So anyways, this week, what I wanted to talk about is money credit and, and funding your business or funding your deals. I was actually scrolling on Facebook early today and I ended up screenshot in this thing and making a post out of it. But there was this article, it says 20 million in student debt is getting wiped out for new Yorkers who went to a predatory for profit college that turned their dreams into debt who went to predatory for, or profit college that turn their dreams into debt. I don't know how you decipher. What's a predatory for profit college and what's not cuz as far as I can tell and I'm concerned is they all charge you a lot of money to go there.
(01:14): And they're all more than willing to, you know, take your student loans, offer you student loans and just, you know, get paid for that. I think the traditional college system is probably gonna start a downfall and I personally would love to see us go back to more trade schools cuz you know, we're just pitched this idea. At least I was, I don't know what was going on in schools today, but when I was going to school, you know, we were pitched this idea of go to school. Like you gotta get good grades so you can get accepted to a good college, go to college, get a degree. And then if you got your degree, you're gonna be, you know, guaranteed this good job with great benefits. And you're gonna have a, you know, live a happily ever life with the white picket fence.
(01:59): And that's just this story that's told to kids. And then, you know, you watch this entire generation, my generation, I'm 34 years old, I'll be 35 next week, follow the plan, do what they're told, go to school, go to college, get the degree. And then they come out and they don't like, you have a degree in liberal arts or you got a degree in business management, but you don't know about business. You don't know how to, to manage money. You don't know anything about sales. You don't know how to interact with people. You haven't learned a thing about work ethic and it's just this big lie that this system has, you know, got everyone to buy into. So anyways, that's kind of starting my conversation that I want to have today. Just about really understanding money in general, but also credit and how to fund your business, how to fund deals.
(02:49): That's what we do. I get asked all the time, like how do you fund your deals? Or when you first started going, how did you get money? How'd you finance everything. So I wanted to talk about that, but it's not just learning how to fund your business or your deals. Problem. It truly is like the root of the issue is that nowhere in school, whether it's primary school, junior high, high school, college, like you're not taught about money. You're definitely not taught about credit and just basic money management. I remember when I was in high school, well, we literally did like an afternoon on how to balance a checkbook and that was it, you know, but then you're 18 years old and you start getting hit with all these credit card offers and then, you know, you're supposed to be going to college cuz that's what you're supposed to do.
(03:31): Well, unless you get a scholarship, which there's not a whole lot of those out there, or you've got parents that are willing to flip the bill for that, how the supposed to pay for it? Oh, well Hey, sign up for student loans. Guys will get you student loans guaranteed. And it's really just setting people up for failure. So, and with that said to be fair, I think there's definitely a time and a place for a college degree when you're, you know, if you're gonna be a doctor or you're gonna be in a lawyer, an accountant, you know, stuff like that. There's definitely a lot of positives for that, but that's why I like the idea of a trade school. Let's go to school to actually learn a skill and a trade and something that we can go, you know, be a positive impact in the, in the community and actually have, have a skill set that can earn you a living.
(04:16): And that's not the same as going for a four year liberal arts degree. So you could say you went to college, so I'm gonna get back on topic here. But where I wanna start with credit, like credit has been so crucial to my journey and my experience in life and especially in business. And I was fortunate like, you know, if you guys have been listening to the show or you know who I am, I grew up in a small town, my parents into business and credit was something that was talked about and I was taught at a young age. She like credit is super important. My parents both had, you know, 800 plus credit scores and just being in the business environment, you know, I understood that we had business credit lines and you know, all through the winter months we would basically survive on credit lines.
(05:02): And then in the spring and the summer, which was our seasonal business for the nursery industry, you know, that's when we made the majority of our money. And then, you know, through the winter months we sold Christmas trees, we sold firewood, but you know, my dad had to keep his employees on and people aren't planting trees and SHS and flowers and and, and really being out yard out so side in the winter months, worried about their yards. So that's just what it is when you're in a seasonal business. So growing up, I was just real lucky to, to be conscious of money and, and how important credit was. And my parents telling me that credit was important. So then when I was 18 years old, I got my first credit card when I was a little over 18. So it was my credit card.
(05:44): I think my mom might have helped me get it, or maybe she opened a card under her account, but essentially had this credit card that I could use. And I started building credit and just didn't really look back from there. Eventually I got my own credit card. I was probably 19 years old. I started banking at us bank and I was, you know, had a job and I was doing the depositing, my checks and all of that. And then the bank teller one day was like, Hey, you know, I'd like to open up a credit card for you. And so I said, cool, sounds good. She opened that credit card. And that kind of got me rolling with building my own credit. So I had always known that credit was important, but when it really set in, for me, that was cool when they were like offered me the credit card, I didn't have to apply for it or anything.
(06:25): They just kind of like gave me this credit card. And then as I would be using it, get notices in the mail, like your credit line had been increased. And I didn't ask for that's just something that kind of happened on its own. I remember I was probably, I was probably 19, maybe 20 years old. I was doing my inside sales job, kicking. And I went to the Honda dealership and I bought a brand new Honda civic, two door coop, blacked out badass car. And I rolled in and they pulled my credit it and they're like, cool, you're good to go. And I was, you know, they didn't ask me for anything. No like nothing I'm 1920 years old, no pay stubs, no tax returns just, I was like, that's it? And they said, yeah, you're good to go your credits, you know, whatever it was.
(07:10): And I walked off the lot with a brand new car and signed in some papers. And that really kind of set the tone for me of understanding how powerful credit is in life. So circling back to just people's credit and especially student loans in our mortgage business, you know, part of getting a mortgage is the pulling. Credit's one of the first things we do. And it's absolutely mind boggling to me to see how many of our clients they're either overloaded with credit or overloaded with debt and they have credit or maybe their credit's okay, but they're just inundated with, you know, student loans and credit cards and just the amount of debt that they have versus the income that they're making. It's just, there's no way they're ever gonna get out. Like I look at it and I'm like, this person makes 40 grand a year.
(08:01): They have $120,000 in, in debt, you know, with all the different stuff, they have car loans, student loans, credit cards, and you just look at it and the math is simple. It's just, unless something major changes in the money coming in and you see the interest that's being charged on, on this debt, that's out. Like it's just, there's set up for failure. So it's just something that we're always trying to help people on. And it's one of the things that I'm kind of passionate about in our mortgage business is really helping people understand credit and debt better and utilizing tools like refinances or debt consolidation to try and help people get in a better spot or they've got just different things that are going on with their credit. We really try and go the extra mile on that to help people cuz you know, it's when you don't, you don't know what you don't know.
(08:47): So if you're not taught about credit and you're not taught about money and how it works, it's really easy to get in a hole in a bad spot and you know, short of a bankruptcy, there's really no way to get out of that. And it's something that people are really a slave to and it follows 'em around and really affects their entire life. So anyways, switching gears, I want to talk about how I've used credit and really leveraged my access to credit, which has given me money to be a able to fund my business and our deals. You know, I've never given away equity in any of our companies. I've never given away equity in any of my real estate deals other than, you know, my, for unit apartment, I have, I've got a, a partner on that that has an equity piece in the deal, but he helped get the mortgage and also put my any into the deal.
(09:35): But outside of that, I've, self-funded everything or taken private and hard money loans and just paid interest. But you know, you see the shark tank and a lot of these companies, you know, these startup companies are out there and, and they've got an awesome idea, an awesome product or whatever it is, but they just don't have the funds to get them off the ground. So they're will and to give up, you know, these massive pieces of equity to their, in their company just to get access to capital. And you know, sometimes you'll see some of the sharks they'll say, Hey, you know, like you really shouldn't be given away equity right now. Like go bootstrap it, go do this, go do that. And I really agree with that concept because there's a thing about when you, when you go, how hustle and you're scrappy and you're just making it work and you're grinding it out and you're taking $2,000 credit card here and you're, you know, any, any 500 bucks that you can go get, you know, that's what I did.
(10:27): I took it. And that just, I think gives you a better start in business, but you're actually have something, right. You're not giving half of your away before you when get started. So I want to talk about our first flip that we did when I was doing inside sales and I was making about 60 grand a year there. I was, you know, I was living, shared an apartment with my brother. You know, I had bought that new Honda civic. I think my payment on it was maybe 380 bucks a month. And at the time I thought I was balling, but it really wasn't a ton of money. So I was really good at saving money. I remember when I would get my checks and my commission checks I used to get so, so amped up when I would be able to, you know, put a thousand bucks aside.
(11:09): So anyways, I started saving money and then when 2008 happened and the stock market just tanked and like Ford when all the way down to like four bucks or $7. And a lot of these big companies like their, their stock price had absolutely tanked. I didn't know anything about stocks at the time, but I just saw an opportunity. I was like this, you know, I should be able to buy some stuff cheap. So during the winter months, cuz I was in the nursery business sales was, you know, was pretty slow. I wasn't doing it ton of sales. So I, I started day trading stocks just companies, you know, like Ford was a big one that I had Citibank apple, Netflix, and some of the, some of those bigger names, stocks. So I was just buying 'em and then, you know, I was seeing started getting better.
(11:53): Like, it'd go up and then I'd sell the stock. So anyways, I started with 10 grand and over the course of probably six to eight months, maybe 12 months I turned that 10,000 into 30,000 was just kind of around with that, doing that as I was doing my sales stuff. And then I had quit that job. And I went out on my own as a 10 99 broke sales rep commission only and was doing my thing there. So I had I negotiated a, I started with a $3,000 a month draw with the company I was doing sales for and I was just paying my own way for everything. So, you know, I was, I was making a little bit of money trading these stocks and then anyways, fast forward, we got our steel under contract to buy and we were able to borrow from a private money lender. We were able to borrow the full purchase price. I don't even remember what we bought it for. Let's just call it 180,000. So we borrowed the full $180,000 from this guy, Gary, but we had to come up with the rehab money on our own. And the rehab was, I think 40 grand or 45 grand is what we spent on that house. So I sold all of my stocks and at the time I had a, a big position in apple and apple was down like half of where it had been from the high before. So that really sucked because to this day that me off cuz I sold those stocks cuz I had of the money for the flip and I left a bunch of money on the table there, but I sold the stocks and I probably had, I don't know, maybe 25 or 30,000 bucks.
(13:22): So I liquidated all that and we had that and that was enough to kind of pay for the labor part of the remodel. And then my brother had a little bit of money saved up and we had done a wholesale deal. So we had a little bit of cash too. And then we went and got home Depot credit cards and that's where we bought a lot of the materials from. So I got a home Depot card and my brother got a home Depot card and we leveraged home Depot to buy the materials for this flip, but also what was really cool about the home Depot card. And then also just a lot of these different store cards in general, whether it's home Depot, lows, tile for less lumber, liquidators, best buy a lot of these places. You can get a credit card and a couple of things will happen.
(14:08): Number one, they'll give you a discount. So you get 20, you know, 10 to 20% off your purchase. But also with the home Depot card, if you spent three, $299 or more, it was no interest for six months. So now we've got access to buy at home Depot. But in addition to that, we don't have to pay interest for six months. So we were literally working on home, Depot's money for free. And that's how we funded our first deal, which is literally scraping an every life savings portion that me and my brother had together. And, and, and we rolled the rest on home Depot credit cards and that got us started in that first deal. So we got out of that first deal and we made like a little over 24 grand. And also during that time we did a couple of wholesale deals and we pulled in like 50,000 on three different wholesale deals, which really kind of carried us through then on our second deal, we asked our dad if we could borrow 50, $50,000, I think it was 50 grand.
(15:06): And we lost 50 grand on that second deal. So borrowed money from dad took, you know, we basically sold the house and the proceeds that we got from it, I think it was like 25 grand. We got back. And then we so we had given that money to my dad and we owed him 25 GS, which in another six months or so we were able to get, get him all of his money back and made whole, so, you know, moving forward now we're were doing a couple of deals at a time and you know, you need to fund them. So we continued to have that hard money guy, private money guy that we first worked with. He was, he probably funded our first 10 deals or so, but then because we had had that home Depot credit card and that worked so well when we sold the house, we were able to pay the home Depot card down.
(15:52): So then I went back to home Depot and said, Hey, I'd like a credit line increase and boom. They gave us a credit line increase, cuz my credit was good. And they saw that we used the card and then paid it down and then used it and then paid it down. So then now I got an increase on the home Depot credit card and my brother did the same thing. He got an increase on his. So it's like, okay, cool. Well where else can we get access to more money? So then I went to my bank and that same credit card that I had had when I was like 19 years old that I opened and had for, you know, however long I went to them and said, Hey, could I get an increase on that credit card? And they gave me an increase up to like 10 or 15,000 bucks and it's like, okay, cool.
(16:33): Now I've got a little bit more money to work with. And I asked the bank, I'm like, Hey, do you have any other options? Do you have any other credit lines? Or you know, any, any other products where I could get credit? And they said, yeah, you could open a personal line of credit. And I was like, okay, cool. Let's do that. Same thing. They pulled my credit and because my credit was good, I didn't have to give them. They, they didn't ask for a pay stubs. They didn't ask for bank state. Well they had bank statements, but they didn't ask me for anything just based on my credit score alone. They gave me a $10,000 personal line of credit. So now I've got this $10,000 personal line of credit. I've got the home Depot card, I've got this credit card also from us bank.
(17:10): So then it's like, okay, well I bet Lowe's is gonna be willing to give me a credit card too. So go to Lowe's and open up a Lowe's credit card. And then it's like, well, we we've been buying our, our flooring from a place called lumber liquidators and they have a business credit card too. So I started opening up all these different credit cards and just having access to money. So I could buy as much materials I can on credit cards because no contractor or the contractors I'm working with, they're not gonna take credit card payments. So now I've got a couple of these different credit cards. I've got this line of credit so I can pull the line of credit and actually get cash and use that to give as right checks or give cash payments to these contractors. And then we're paying for the materials on the home Depot card, the Lowe's card, the lumber liquidators card.
(18:00): I went and got one at floor and decor. So basically like if you had a credit card and you were open to giving it to me, I was gonna take it and use it. And that's literally how I've built my business and got things going and, and was able to, you know, continue to do deals and fund these different projects that we had going. And one other key piece, I know I talked about it with the home Depot card, but literally every single one of these store credit cards that I was opening, they all offered an introductory rate or they all offered, like if you spend X amount, then there's no interest for six months, 12 months, 18 months. So I'm literally working on these people's money for free. And you know, we just started, started rolling it and just kept rolling it from deal to deal, to deal and kept that going.
(18:48): And then, you know, as a, I would continue to do this and I'd pay credit card down. Then I would go and ask for an increase on the limit. And I just kept doing that over and over and over as I'd pay it down. I'd Hey, can I, can you increase the limit? They'd ask me how much I'd say as much as you guys are willing to give me. And I've played that game literally for 10 years, all the way to where we are today. It that's really kind of how things got rolling and what we were doing. And then also we had the LLC set up. So once the LLC, you know, the bank account was starting to see some money flow to it. I went back to the bank and I said, Hey, could I get business credit cards for our LLC? Or do you have a line of credit that I could get for our LLC?
(19:29): And they look at my personal credit and they looked at the business account and saw stuff was happening in there. And they're like, yeah, sure. So now I've got personal credit that I'm using and now we're starting to get business credit cards and a business line of credit. And one of the coolest things one day in the mail showed up was a convenience check. So us bank would send me these convenience checks. So the difference between a credit card and a credit line is a credit card. You can basically, you have a card and you can make transactions on it. You swipe it. And it's good. What's cool about a credit line is you can go just pull the money and you can use it for whatever you want. So credit cards are cool, but you can only use 'em for transactions versus a credit line.
(20:13): You, you can go out and say, Hey, I need 15,000 bucks. And as long as you have that available, you can get it via a cashier's check or they can just transfer that cash money into a checking account, which was awesome. So anyways, back to these convenience checks and I got this convenience check in the mail and I was looking at it and it was tied to my business credit card. However, there were checks. So basically I could write a check to whoever I wanted and it was like a check. So essentially this credit card is now turning into a line of credit. And the offer on this convenience check was a 3% transaction fee. So however much money I wrote the check for I'd have to pay 3% of that as a transaction fee. And then it was like 0% interest for 12 months or 18 months.
(21:01): I'm like, you've gotta be kidding me. So I'm gonna pay 3% of $10,000. I'm gonna pay 300 bucks to have access to $10,000 for a year on zero interest. Hell yeah, we'll do that. So, you know, started taking that out and then, you know, I was like, well, if us bank is willing to do this, I bet some of these other credit cards are willing to do the same thing on my credit cards. So then I started reaching out to the credit are companies that I had credit cards with and like, Hey, do you guys offer convenience checks? And some of 'em did some of 'em didn't. So now I'm getting convenience checks from some of these other credit cards, which, you know, I've been using and paying them down and asking for increases. So now at this point I've got credit cards for $25,000 limits.
(21:45): And now I can have access to these convenience checks with my credit card. So same thing, these checks come in and I just write 'em out to myself, Michael Burns or my LLC. And then I just go deposit these convenience checks straight into my account and then boom, the cash is there and I can use it however I want. So I would use that to pay contractors, cuz again, these contractors aren't gonna be most 'em won't accept credit cards. So this is literally the game that I had been playing for like 10 years, just continuing to build my access to credit and capital via credit cards and credit lines. And like I said, you know, as I would pay 'em down, I would go ask for increases. And I've just done that over and over and over. So that's what I've done to really kind of fund these projects that we're doing on the flip or to have money for marketing and stuff.
(22:36): And then as you know, we sell these deals and money comes back in, we'd pay stuff down. If it was 0% interest for any point in time, I would never pay that often full. I would only make the monthly payment because I could continue using that money. So if I, you know, if I had a $10,000 convenience check, 0% interest for 12 months or 18 months, I would never pay that down other than the minimum monthly payment, because I wanted to keep that money and keep being able to use it because it was 0% interest and I had already paid the transaction fee on it. So just kept doing this and doing this and doing this. And then, you know, at a certain point, my credit score it didn't tank or grow down, but you start to have a lot of your debt utilization is out.
(23:21): So what debt utilization means is let's say you have $10,000 on a credit card and I've got a balance of $9,000. Well, on that specific credit card, I have a 90% debt utilization. So that's gonna affect your credit score and bring your score down because it's basically showing that a lot of the credit that you have access to is maxed out or close to maxed out. So there's two thresholds when it comes to your credit score that get affected. Anytime you carry a balance over 30% of your available credit, your score is gonna take a hit. And then anytime you take a balance or you carry a balance over 50% of your available credit, your credit gonna take a real big hit when you, when you cross the 50% mark. So that's why, you know, as I'm doing this, I'm, you know, I'm tracking my credit score on credit karma and you know, some of the free places where you can get your credit score and I'm starting to notice, oh, why did my score go from seven 50 down to like a six 30?
(24:21): What the is going on? So then I'd start learning about, you know, credit and how that worked and how it affected my score. So I started to understand, okay, when I pay 'em down or if I, you know, I starting to able to manipulate the balances that I would carry a little bit. So then when I was going back to the banks and I would ask them to give me an increase in the credit line or an increase in the credit card, I would want to do that when I knew my credit score or was gonna be good or at least stronger. So now with having a good solid credit score, and then also having history with that bank of them, seeing, you know, I have credit history with them and that's just as important if not more important than my actual score itself because they can see my past performance.
(25:02): Oh, this dude's max is seeing out and paid it off, you know, 6, 8, 10, 20 times. I mean, he's asking for an increase. Well, he's earned it. Yeah. We'll absolutely give him an increase because we want him to keep using our money. So anyways, that's how I've done that. And for our flips, that's how I've funded the rehab. But also on the other side of that, I've been building relationships with hard money lenders and private money lenders. And I would be borrowing that money to buy the purchase of these properties. You know, so difference between hard money and private money, a hard money that that's usually you're gonna be dealing with someone like that's what they do. They lend hard money. So either it's their money or maybe they've got a pool of investors and they place this money. The deals usually hard money. You're gonna pay a couple of points.
(25:50): One point is 1% of the loan amount. So if I'm borrowing a hundred grand, a point would be a thousand dollars. So, you know, in Utah, when I've started doing these deals, the going rate for hard money was two or three points and 12% interest. So, you know, if I borrow a hundred grand, I'm gonna pay two to $3,000 in an origination fee or also known as points and then 12% interest, which is essentially one point per month or 1% per month. So, you know, I'm going to the salt lake, real estate investors association, I'm going to any and meetups and just anywhere where real estate investing was happening and going on, I was making sure I was there, whether it was a lunch meeting, a night meeting, whatever it is like I was there and I was networking. I was moving and shaking.
(26:41): And now that I'm starting to do deals, I'm telling, I'm talking to as many people as I can. I'm showing up. People are starting to see me. They're starting to recognize me and remember me. And now I'm talking about the deals that I'm doing and people are starting to see, you know, oh, this mic and tight burns guys, they're, they're making moves. You know, they're they're they did a deal. Oh, now they got two flips going on. Now they got three flips going on. Oh, they just whole, all the couple deals. So we are starting to build credibility and I'm building relationships. And in these groups that I talk about, and I tell you guys this in the show, like if you want to do something, go put yourself in the environment where what you want to do is happening and being done. So we're hanging out in these real estate, you know, networking groups and crowds, and guess who's the there hard money lenders guess who's there guys that have money that they wanna lend into deals.
(27:28): So I explained what hard money was, what private money is, is. It's basically the same thing, except private money is gonna be a, like, for example, Gary, my first investor that put money with us, he was just a retired dude. He had sold his computer company or what technology company, whatever company he had, he lived in Cedar city. And he had recently retired, sold his company to IBM. And, you know, I don't know how much money he made, but he had some cash. He was retired and he wanted to start investing it in real estate. So, you know, same thing. He's going to these, these different groups. And I meet him at one of the seminars one weekend. And I've told this story before on the podcast, him and his wife are there, they're brand new to real estate. He's figuring out what he wants to do.
(28:13): And it's real clear to him that he doesn't really want to be managing properties. And he doesn't want to be around with flipping properties, but he's got money and he would love to invest his money in the deal. So he was, Hey, being a private money. Lender is something that would work for him. So I met Gary there and just fast forward, I've kept building these relationships. And, you know, I used to borrow money at two or three points and 12% interest. And I'd have to put down at closing, you know, they would fully fund the purchase or be, they'd only want to fund 90% of the purchase price of the home and then I'd have to cover the rehab. And when we first started going, I would actually have to deposit the money for the rehab. And this is where having that credit really helped.
(28:57): Basically we'd have to put the money in an escrow account and then draw back out. So at closing, we would put, you know, say the $80,000 in an escrow account, just so these money lenders would know that we actually had the money to pay for the repairs. Or there was times where I showed 'em bank statements or I would show 'em, you know, like basically my access that I had to credit. And I would show them essentially that we could, we had the money to pay for the repairs, cuz it's a new relationship. I'm a young dude. I look younger, actually am we don't have a ton of experience, just a lot of hustle. So we would put this money in an escrow account. And then basically as we would move through the process, I would reach out to, you know, the money lender and say, Hey, you know, this is where we're at.
(29:40): I'd send them invoices and I'd send them pictures of the work that had been done. And then they would release like 10 grand to me or 20 grand to me, however much it was. So that's how it started. And then, you know, you start doing deals and building relationships and then the trust gets higher. So now these guys are fully funding our deals, a hundred percent of the purchase price, not asking me to put any funds in S grow, to be released on a draw system, back to me. And then as I'm continuing the network and, and meet more people, we, you know, I run into more guys that want to invest money. So now I have more private money and now I'm paying two points and 12%. And then, you know, I have this one of my main investors now who I have several million dollars a of his at any given time, you know, he started at two points and 12% and then got down to one point and 12%.
(30:28): And now, you know, I just pay him a straight 12% on his money and it's because it's a great relationship. And it's good for him. It's good for me. But you know, as the market's gotten tougher and the deals have gotten tighter and I'm putting more and more of his money out, I may, you know, I started being able to say, Hey, I can't pay two points on this deal. It's a little skinny, but you know, I'd love to get your money in the deal and you know, I could pay 12% and then that's just kind of slowly gotten me to where I'm at. And then when you're bringing on other investors for these deals and they're interested in placing money with me now, I just tell 'em yeah, we pay 10% or we pay 12% and they're super excited because they want to get their money in real estate.
(31:06): It's a safe, hard asset. I've got a super long track record and they're, they know their money's gonna be safe with me. So now I'm able to pay less. And when you can remove the points that really makes your deals more profitable. So I'm literally sharing with you guys how I'm able to flip to 12 to 15 properties at a time. And you know, we're paying for some of these houses, cash our own money, but I'm still to today covering all of the rehab on our own cash and credit. So, you know, if we're spending 60 to $80,000 on a property and I got 12 to 15 properties going, that kind of gives you an idea of the capital requirement to have our deals going. Plus I've got my mortgage company, which has overhead and expenses that we need to be able to fund. I've got the real estate brokerage that has expenses and that we need to be able to fund.
(31:55): We've got our rental properties and you know, just different stuff going on. So the more my business grows and scales, the reason that's able to happen is because I have relationships and I have access to credit or I have access to money and I've got a bank roll of my own cash that I've built over the last 10 years that we just keep rolling into deals. It's like, rolling it, rolling it, rolling it. And it's just growing and kind of this snowball effect. And that's, what's allowed me to get to where I'm at with the volume that we do. So now that you know, I'm more established and I've got rental properties, I've got my primary residents, I've got equity and things. Now I'm still doing the same thing I have. I, I don't use as many credit cards now, like the, the discover card for 2,500 bucks.
(32:41): Like that's not beneficial to me, but now I've got like American expresses with 50 and a hundred thousand dollars you know, limits available. We've got credit lines personally in business that are, you know, upwards of 50 grand per, and we got a bunch of those as well. So that helps. But home equity line of credit is like the next little bit more advanced strategy that I've been able to use to access money, to roll into my deals. So, you know, for example, my personal home, I have a $250,000 line of credit home equity line of credit on my house, cuz I've got, you know, a ton of equity in my home. So instead of having the equity, just sitting in my house, I put a home equity line of credit on it and I borrow against the equity in my home. And what's cool about this is the interest rate is like 5%.
(33:30): I think that's what it is 5%. But again, when I opened this home equity line of credit, I got a 1.9% introductory rate for either six or 12 months. So I told you guys earlier, I'm borrowing money from my investors at 10 and 12% or you know, different credit cards and stuff have, have higher interest rates. But now I'm able to have 250 grand just on my personal home at like 5%. So I can take that money and I can deploy it in to my business and into my deals. And it just gives me more leverage and it gives me I'm paying a lot less for it. Plus when I put my HeLOCK in place, it was still under the old tax code. So I is tax deductible as well. So now not only do I have access to the money, but I'm able to write off the interest that I'm being charge for it.
(34:21): So, you know, it's not free, but it it's getting closer to free money to use same thing. I've got rental properties that have equity in 'em. So I found a local credit union that's willing to do home equity lines of credit on investment properties. They'll go up to an 80% loan to value. So now I've got home equity lines of credit on like three or four of my rental properties that have enough equity in there to where it makes sense and same thing, introductory rate on it. And the interest rate on those is like five and a half percent. So now I pick up another several couple hundred thousand dollars at five and a half percent instead of paying 10 and 12%. So I'm just getting access to more fun, but also paying less for it. And I can expense it out because you know, interest is essentially a ride off for it.
(35:09): So I'm sharing with you guys what I've personally done to, to build and grow and scale my business through access to, to credit. I'm able to do that because I have a good credit score. And because I've got good credit history, meaning that I've never missed a late payment, like I'll cut my arm off before I mess up my credit. Maybe not literally, but pretty close credit is everything like it is credit and relationships in business to me are more important than anything. If you don't have credit, you're not gonna be able to scale. It's gonna make it a lot more challenging. I take that back. It, you, you can still scale. It's just, it's gonna be more challenging. Credit has been the biggest asset that I've had in growing my business and then relationships or credit and relationships are the two things that I will protect at all costs with every, anything that I just said, it's a high risk game, too.
(35:59): Guys. You have to have a, a pretty high tolerance for for risk, pretty high tolerance for debt rolling around, knowing that I've got millions of dollars in debt. You know, some people can handle that. Some people can't, but the reality is, is you're never gonna scale a business and, and get to where you're gonna be rich or wealthy to what I'm trying to do anyways, saving your way there or doing it. One deal at a time. That's just not reality. So you gotta be willing to, to, to be able to handle that risk and handle the stress and the pressure of knowing that you've got a shitload of debt out there. However, it can be the, you know, one of the biggest and greatest tools to help you scale your business. So just because you can get access to money, doesn't mean that you should do it.
(36:45): Like you have to be financially literate. You really have to understand money and credit and you gotta be highly responsible with this because as much as it can help you, it can ruin your and your life overnight as well. And you know, if you go through a bankruptcy of any sort or you got bad credit, like that's gonna make life really difficult, both personally and professionally in business. So with that said, it's might sound sexy and, and, and exciting and all that, but just, you know, there comes a disclaimer with it that you really have to understand what you're doing and you have to be very disciplined and you gotta make sure that you're being responsible with this money that you're taking out because credit has to be paid back. And that's one thing that I think sometimes people don't quite understand is like, oh yeah, I'll borrow it and I'll pay it back later.
(37:33): And that's really how you get and you ruin credit. And when we're doing mortgages, looking at people's credit off, you can just see that. So really understanding the responsibility that goes along with borrowing money is what's gonna help you be successful with that. But when you start building a tracker record, credit's a big deal. Like I literally bought a Ferrari guys. I bought the $300,000 car on a credit score. They didn't ask me for. I didn't give 'em a bank's statement. I can, I didn't give them a pay stub. I literally didn't give them anything other than a copy of my ID. And they pulled my credit and that's how powerful credit can be. So anyways, I hope that provides some value to you guys. I get asked a lot of times how we fund our deals, how we structure stuff. So start to finish from before doing my first deal, all the way to where we're at to day in business.
(38:20): That's literally my journey of, of how I've been able to build credit and build access to money and different things. So I appreciate you guys listening to the show. I hope you learn. I hope it brings value. If it does, please share the show, tell a friend leave me a review. I'm back on the gram still. They haven't shut me down yet. So my new Instagram is at Mr. Mike Burns, burns with a Z Facebook, Mr. Michael Burns and have a great week until then go build that lifestyle. And we'll see you next week.
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