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Should You Use a Real Estate Investor Line of Credit to Buy or Renovate Property?

By Joe

Real Estate Investor Line of Credit

One of the best ways to build net worth is through investing in real estate. Whether you buy and flip or buy and hold, real property can generate tremendous profits for individuals and businesses. The average ROI on real estate investment is in the 12-16% range, which is quite a bit higher than the stock market.

Once you get serious about your real estate investment strategy, you need to explore all of your financing options. Here, I want to talk specifically about real estate investor lines of credit. 

Here’s what we’ll cover: 

  • What is a Real Estate Investor Line of Credit?
    • Credit Cards vs Loans vs Lines of Credit vs Hard Money
  • Frequently Asked Questions
  • Conclusion

What is a Real Estate Investor Line of Credit? 

A real estate investor line of credit is a revolving credit line dedicated to the purchase, repair, and renovation of investment property. This type of financing is extended based on equity in a real estate investment and can be used much like a credit card, which means that an investor can tap into the funds multiple times. 

These credit lines are extended from banks and credit unions to individuals and businesses for the purpose of funding new investments or rehabilitating or updating an existing investment. The process is fairly straightforward and similar to a HELOC loan on an owner-occupied home. 

And, here’s how these dedicated credit lines stack up against some of the most common real estate (RE) investment financing options. 

Credit Cards vs Loans vs Lines of Credit vs Hard Money

Let’s quickly clarify the differences between credit cards, loans, lines of credit, and hard money as they can apply to real estate investing. 

First, a credit card is a revolving line of credit that can be used for various purposes. Visa, Mastercard, American Expresss, and Discover cards can be used universally to pay for almost anything, as long as the seller accepts these payment forms. While most home sales channels don’t accept credit cards, you can convert credit cards into cash to pay for investments. Credit card interest is around 15% on average. 

Next, a loan is usually extended with set terms. This means that you will be given a certain amount of cash to be used at one time then paid back by a given date. In Real Estate terms, a loan typically refers to a mortgage and can be taken in the full amount of the property, less any down payment. Typical repayment terms are 15, 20, and 30 years. Right now, the average interest rate on a mortgage is between 2.3 to 2.9%.

Then, lines of credit can be used like credit cards with revolving terms, yet typically have interest rates akin to mortgages. In a sense, it may seem like they provide the best of both worlds. However, lines of credit typically can’t be used to fund an entire home purchase and instead provide a short term solution to an immediate real estate investment need. 

Finally, hard money loans are usually reserved for investors with less than ideal credit as a short-term funding option since the average interest rates are between 11 and 18%. A hard money loan is usually extended to a buyer by a private party like an investor, business, or the seller of the property. 

Frequently Asked Questions

Here are answers to some of the most common questions I hear when discussing real estate investing with both BCW members and colleagues. 

Can you get a line of credit on an investment property?

Yes. As long as a property has equity in it, whether it is used as your primary residence or place of business or solely as an investment, it can be leveraged to obtain a line of credit. 

How do real estate investors get financing?

Real estate investors fund their home purchases and renovations through a variety of financing options including loans, credit cards, lines of credit, and other less common channels. 

What is an investment line of credit?

An investment line of credit is a short-term financing solution that provides the borrower with a revolving line of credit on either a property that is not occupied by the owner or another investment. 

Can you take out a line of credit on a rental property?

Yes. You can take out a home equity line of credit (HELOC) for a property that you rent the same way you can a home that you occupy. 

Can you get a 30-year mortgage on an investment property?

Yes. 30-year mortgages are available for investment properties and owner-occupied properties. 

How can I invest in real estate with no money and bad credit?

The most common way that people with bad credit can get started with real estate investing is through hard money lenders. These situations are usually short-term (until the buyer can improve their credit) and used as a last resort. 

Can I use a business line of credit to buy a house?

If you have a large enough business line of credit, you can use it to buy a house, but you should not treat it as a 30-year mortgage because this would incur much higher costs than necessary. Learn more about the BRRR method of real estate investing. 

Is it smart to use home equity to buy an investment property?

If an investment can generate more income for you, it can often be a smart move to use your home equity to buy another property. 

Conclusion

If you’re looking for a line of credit that you can tap into repeatedly on your real estate journey, you will use the funds solely for real estate, and you already have equity in property along with a good credit score, a real estate investor line of credit may help you make your next move to secure your future. I find that it’s best to diversify your funding options. 

If you’re interested, here I explain how to use business credit to buy real estate.  And, if you want to get up to $100K in business credit in 30 days, join Business Credit Workshop today.

Is Dell Business Credit Worth Your Time?

By Joe

Is Dell Business Credit Worth Your Time?

When you’re a Dell-lover looking to build your credit profile and in need of a new computer, in-house financing is a natural place to turn. You can get upfront funding for your new equipment and potentially boost your scores. But, is the program worth your time? Read this Dell business credit review, and answer that question yourself. 

First of all, What is Dell Business Credit? 

Dell business credit is one of three business financing packages offered by Dell to fund the purchase of its PCs, electronics, and accessories. The business credit program is controlled by WebBank, who also partners with companies like Avant, Lending Club, Fingerhut, and PayPal to offer financial services to these brands’ existing customers.   

Dell Business Credit Offers Promotional Pricing on Specific Equipment

Financing can only be used to purchase directly through Dell and the brand offers promotions on specific equipment. 90-day, 0% interest is a popular example. 

The three financing options offered by Dell are: 

  • PC as a service
  • Dell business credit
  • Lease options

In addition, Dell offers custom solutions for enterprise solutions for medium and large businesses. So, larger companies can reach out with their needs to come up with packages under the pretense of greater savings on bigger orders. 

At first glance, the program looks fine. Yet, Dell’s business financing reviews online seem to deliver more than the usual amount of complaints. So, I decided to dig into the program and share unbiased facts. After reading through, you should be able to decide if the program is worth your time. 

Next, How Difficult is it to Get Dell Business Credit and Will You Qualify? 

Borrowers who apply for Dell business credit are often surprised by the approval process and credit amount. For example, one business applicant who made $62K in purchases from Dell the previous month was offered a $5K tradeline (MyFico). The amount of funding led this user to the conclusion that WebBank, the actual lender, doesn’t factor customer metrics within the Dell company into its decision. 

While this seems a bit wonky and impersonal, Dell did allegedly finance another customer for the same $5K business credit with no social security number and after locking their reports (MyFico). This possibility is appealing because it means that you could potentially qualify for a tradeline without sharing your personal credit report and conceivably start building business credit.

So, if WebBank will qualify an applicant for $5K in credit with no credit history, how easy is it to get a Dell business credit card? 

According to WallettHub, WebBank’s cards, including the Dell Preferred Account (which is not the same as the business credit card) are subject to approval with personal credit scores of 640 and up. So, while all situations are different, it’s a fair assumption to make that it is pretty easy to qualify. 

And, What Business Credit Report Does Dell Pull? 

If you have a fair business credit history with one bureau and bad credit on another, you need to make sure your lender will look at the report with the more favorable score. So, which report will Dell/WebBank peek in at when qualifying you for approval? According to multiple borrowers, you’ll see a hard pull on your Experian report when you apply for a Dell business account. 

Then, Why all the Poor Reviews? 

Let’s take a look at the common complaints about this card from existing borrowers. 

  • High interest
  • Poor customer service
  • High interest
  • High interest
  • Lack of payment technology
  • High interest

Many of Dell’s borrowers complain about the fact that they still owe the full amount of their equipment after making payments, sometimes for years. And, they express that there was no explanation that if their account wasn’t paid in full before the promotional no-interest period, that they would be charged the full interest amount. 

Yes, the above is frustrating, but these payment conditions were in the terms and conditions laid out by Dell and WebBank. It’s just that the borrowers didn’t see or understand them. 

You should always expect to pay interest on purchases made during a promotional 0% interest financing period if your balance is not paid in full before the end of the period. 

So, is Dell Business Credit Worth Your Time? 

If you need Dell equipment, should you go straight to the source for funding? — This is the wrong question. Instead, ask yourself the following: 

  • What are Dell’s current business credit promotions? 
  • If I leverage these promotions, can I save money on the equipment I need (the promotions often offer 15% price discounts on products)? 
  • If I leverage these promotions, will I be able to pay off my card within the promotional period to prevent future interest spikes? 

If you need Dell equipment and you can afford to pay off your purchase within 90-days, there’s no reason not to take advantage of the financial services. In fact, you could see a bump in your credit scores for on-time payments. 

Related Answers

Does Dell have financing?

Yes, Dell offers several consumer and business financing solutions through WebBank for the purchase of its equipment and accessories. 

What credit score is needed for Dell financing?

According to WalletHub, WebBank, who controls Dell’s financing options, qualifies borrowers with credit scores of 640+

What business credit report does Dell pull?

When applying for Dell business credit, your Experian report will be pulled. 

Does Dell finance bad credit?

According to many borrowers, Dell credit is fairly easy to qualify for, but typically, lenders do not finance anyone with bad credit. 

Can I buy a laptop and pay monthly?

Yes! You can leverage financing directly through most laptop manufacturers as tradelines or use alternative funding options to make monthly payments on a new laptop. 

Can I lease a laptop?

Yes! Most major laptop manufacturers have lease options for businesses and consumers. Dell’s progressive leasing is one example. 

Final Thoughts

Dell business credit offers no major rewards — this type of financing doesn’t allow you to generate points, airline miles, or cash awards. But, for businesses early in the credit building journey, if leveraged properly, Dell’s in-house financing can be helpful. Learn how to make the most of your credit profile. Start by understanding how to use 30-day net vendors to boost your business credit score.

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