00;00;00;03 - 00;00;27;19
Unknown
All right. Welcome back to the Seven Finger Flipping Podcast. I'm your host Adam Whitney. I'm the CEO of seven finger flipping and blackjack real estate. I do hundreds of deals. And I'm excited to bring on our guests today who some way more important than what I do. My good friend Ari Paige from Fund and Grow Funding grow is a company designed to help real estate investors and other people get some more liquidity into their business so that they are not stalled out on growth.
00;00;27;21 - 00;00;47;02
Unknown
Ari, welcome to the show, man. Thank you for having me. It's so awesome to have you so many of us, know that there's a lot of options out there to get money and funding for our deals, but talk to me about what funding grow is and where you even started, and how funding grow became a thing. Yeah.
00;00;47;02 - 00;01;08;11
Unknown
So using business credit cards for funding is definitely a, it's a very novel idea. So it started all the way back in 2005 when I was investing in real estate. And at that time I was having a very hard time getting access to funding. I didn't really qualify for a lot. And, it was just very difficult.
00;01;08;12 - 00;01;27;06
Unknown
And so I ended up working with someone who became my mentor at the time. His name was Dave Candle, and he was actually in a loan company. When, you know, a loan company that I had looked at getting funding with. And, he pitched me on coming to work with them. And so I started working with them and helping doing mortgage loans.
00;01;27;09 - 00;01;57;12
Unknown
And this was right as we were approaching the 2008 collapse, the crash, and, as we were approaching the mortgage company that we were working with, the actual lender that we were brokering loans through, they started having a drop on the loan to value amounts. I started dropping and dropping and dropping. And so the different mortgages that we were working on started radically going down, like the amount of cash that someone needed to bring to the table in order to close that loan.
00;01;57;14 - 00;02;23;08
Unknown
And so because we were working with on commercial mortgages and we were doing working with all businesses, we found that we were able to actually apply for and get approved pretty easily for business credit cards, and that you could use the business credit card as a down payment on like hard money loans and different types of mortgages. Back then, it was a little different than it is today, and so we were able to get up to 500,000 at the time pretty easily.
00;02;23;10 - 00;02;51;07
Unknown
And after the crash of 2008, we we decided to retool and to start helping go after business credit cards instead of doing mortgages. And so we started working with the same affiliates that we had been working with that were sending us mortgage loans. And at the time we were charging 1500 an hour to do the service. Wow. And you could take anywhere from 15 to 20 hours for each client.
00;02;51;09 - 00;03;07;16
Unknown
And so we were loving it. We were loving it. But our affiliates that we're working with were like, listen, you can't make more of our clients than we are. So you need to come up with a package. You need to make this something affordable so we can send a lot of folks to you. Because, you know, obviously a lot of people aren't going to be paying 20, 25,000 for loans.
00;03;07;18 - 00;03;46;00
Unknown
Even if you can get 300, 500,000 of it. And so we created a package and we created a one price as a consulting program to help clients over a three round, 12 month period of time. And that's essentially how the funding Grow program was born. So at that point, we took all of our office staff and we retooled and we created this system that we could put lots and lots of clients through a standard, where we would first help them with their business credit profile, then move them forward in applications, then show them how you can use a business credit card to fund things like an escrow account, or pay businesses that don't
00;03;46;00 - 00;04;10;25
Unknown
accept credit cards. How to do that legally and quickly. And so it's just been a lot of fun since then. Since that time, we've funded 35,000 clients, $2 billion of business credit cards. Wow. That's insane. I'm a user of funding grow. But I also want I want to let's let's circle back a little bit. You said a few things that are super interesting.
00;04;10;28 - 00;04;35;09
Unknown
First off, you said that the loan to value amount was declining, meaning that if you had a property that was 100 K property, and at the time, if they'd give you 75%, maybe now they only give you 60%, so you only get 60 grand. You still have to come up with that gap. Exactly. So for those who are listening, when he says loan to value amount was going down, it means the amount of money that the bank or the hard money lender would give somebody.
00;04;35;17 - 00;04;52;10
Unknown
And you've got to figure out how to pay that in between money. So I thought that was, really important distinction, because that's a problem that we have every day. Investors go out and they learn this game. They figure out like, okay, I can there are capital sources to buy a deal, but they don't give me all the money.
00;04;52;12 - 00;05;09;08
Unknown
And I've got to come up with all these chunks of money, especially from doing more than one deal at a time. What are the resources I have to do it? Obviously, you guys are one of those and we'll talk about that. The other thing that you mentioned was I went into business credit. I figured out how to get people up to $500,000 of business credit.
00;05;09;08 - 00;05;32;12
Unknown
Super powerful. What? So right now we have a lot of investors, house flippers. They go out and they buy a bunch of houses. Then they go into rehabs and they're spending tons of money during the rehab. A lot of times they're putting it on personal credit cards. And what ends up happening is their credit utilization goes up and their credit score goes down.
00;05;32;12 - 00;05;51;09
Unknown
So now makes them less lendable. So they end up in this really terrible cycle. Can you talk to me about the difference between personal and business credit cards and why somebody would want business? Yeah. And you hit on it. It's the utilization ratio. So when you're using a personal credit card, as you just said, it's going to pull your scores down.
00;05;51;12 - 00;06;20;21
Unknown
There's what's called the 35% ratio. And that 35% ratio is the the bottom line that lenders are looking at if any given credit card. This isn't all your credit cards added together. Any individual credit card that you have goes above a 35% utilization ratio. So just real quick for viewers, if I have a $10,000 card and I go above $3,500 on that card, now it is 35% of the 10,000 limit to the $3,500 balance.
00;06;20;24 - 00;06;40;27
Unknown
And the higher I go up, the lower my scores go. And that makes it difficult to get access to future funding. Every time that a lender now looks at my credit report, they're seeing a lower and lower score. It looks like I'm maxed out. I look like a bad borrower. So when I'm using business credit cards, they do not report to my personal credit report.
00;06;41;00 - 00;07;02;07
Unknown
They're going to initially do a personal credit check and look at your credit to determine your worthiness. But then they report the business credit card to the N number or the tax ID number of your business. And once it's reporting to your business, now you're building business credit, you're building Equifax and Experian business, you're building Dunning Bradstreet, which is your payback score.
00;07;02;14 - 00;07;29;02
Unknown
And that's going to help you become more lendable with other business credit cards in the future. And it's also going to keep those utilization ratio strong. Even showing up on your report, you're able to use the entire account balance very easily and then it won't affect your personal scores. This is how we can do multiple rounds of funding, because if we did that first round of funding and then you maxed out all those cards and we're not going for a second round or a third round, you can't do this with personal credit cards.
00;07;29;08 - 00;07;50;20
Unknown
And unfortunately, that's something that all too often you see businesses offering is applying for you for personal credit cards. Not only is it an FTC violation to charge thousands of dollars just to apply for personal credit cards, but it harms the consumer. You're in a dangerous category of B2C versus B2B. You know, business to consumer versus business to business.
00;07;50;22 - 00;08;14;08
Unknown
So it's much better to stick with a business credit card for a whole variety of different reasons. Yeah. And I think, new house flippers, don't they. They? The first deal is so exciting. The first few deals, the next deal so exciting that they're doing, they're scrapping together whatever they can do, and they're crushing their liquidity. They end up with, you know, this is like the typical house flipper problem.
00;08;14;11 - 00;08;34;01
Unknown
I'm doing a whole bunch of house flips. I have no money, no cash available to me. But I've got tons of equity out in these properties, and I just take whatever cash comes in on this deal, which is a big chunk of change. It's like the average house flip profits 41 grand. So they take that 41 grand, they put it back in their pool money and they just immediately redeploy it.
00;08;34;01 - 00;08;54;07
Unknown
They never actually have it. And most of them aren't even paying themselves because they don't understand this hack and how capital and the capital stack works specifically in flipping. So this is really, really important for us now with business credit, once they get this business credit set up. So I come to you at Fund and Grow. You help me get my three rounds.
00;08;54;14 - 00;09;16;08
Unknown
And in those three rounds, what does that look like? What do I get access to, what can I use it for, and how much liquidity can I expect to inject into my business? So now things have definitely changed since 2020 and even before because we we got into this in 27, 20, 2007, 2008. And that's when we were getting into big amounts.
00;09;16;13 - 00;09;43;15
Unknown
In today's world, it's a lot harder. So we're looking at like 300,000 over three rounds. That's what funding grow now advertises is 300,000 in introductory 0% cards. That could be anywhere from six months of 0% all the way up to 18 months at 0%. There's a couple cards that are at 22 months at 0%. You might imagine how many deals you can do over a 22 month period of time.
00;09;43;20 - 00;10;14;19
Unknown
If you have 0% capital, it's, you know, it's amazing. Plus, you get cash back on every transaction you do. Some of the cards will give up to 5% cash back. It's very common to get 3% cash back. And so in the first round of funding, if someone has good personal credit and keeping in mind that the cards are not going to report to your personal credit, but they have to first look at your personal credit, someone could be looking at getting anywhere from 30 to 80,000 on that first round of funding, and that's for someone who's qualified.
00;10;14;22 - 00;10;32;14
Unknown
If someone's not qualified, then they need to go to a completely separate company to do credit repair. And that's not something that funding grow does. We don't do credit repair, but we can refer you to someone that would do credit repair. So if someone does have good credit, then they can move into the program. Then we're going to look at their profile.
00;10;32;15 - 00;11;15;23
Unknown
We're going to determine what we can do to boost their business profile. Before we even move forward with that first round of funding. We don't want to be walking uphill with a broken leg, so we got to fix everything. First, make sure that you look as lendable as possible. Then do the applications, then where our data shows that 72.4% of the approvals come in through a funding growth specialist, walking the client through the verification and negotiation process, which sounds a lot more complicated than it is, but essentially it's walking the client through, verifying themself with the bank, asking for higher limits, taking their old cards and merging those into the new applications that had that
00;11;15;23 - 00;11;35;02
Unknown
carry 0%. Why would you want an old card at 22.5%, when you can merge it into a new application that we've applied for, and take that whole limit and move it over and keep it at 0%. And that's all within the same bank. So I heard this, I'm going to tell personal story real quick. Okay. And you, maybe you tell me this is not a good thing to do.
00;11;35;03 - 00;12;05;15
Unknown
When I was very early on in my real estate investment drama military guy. So I had these rules around military and credit card limits. Right. Ezra, you've heard of that service. So, like the Service Member Credit Relief Act or something. And I was I bought a couple rentals. This was before I like learned the game intimately. And I saw on this military Facebook page this guy posted, hey, I just went and got a $25,000 Amex personal loan at 0%.
00;12;05;16 - 00;12;27;03
Unknown
Now, at this time I had been listening to podcasts like this and people who are now my mentors and I just remember them talking about money and how powerful it is, like money is just money. Capital, wherever you get it from is just capital. There's a cost to use it. Typically, hard money we know is going to be 12%, two points, 13 and three for a new person.
00;12;27;03 - 00;12;55;28
Unknown
It's expensive. That's expensive money. And I remember them talking about free money is insanely valuable. If you can get money at 0%, the velocity of what you're able to do is you get a head start. You can go way, way faster. So I see this guy right in this Facebook form that he went out and got this Amex loan for military under the guise of the s CRA, and they basically made that $25,000 personal loan, 0%.
00;12;56;00 - 00;13;09;24
Unknown
And I was like, there's no way that that's true. So I looked at how he said he did it and I went in apply. I told my wife, I said, hey, if they give this to me and I don't get it approved, they give me the money, but I don't get the rate approved at zero. When I submit this thing he told me to submit, I'll just give it back.
00;13;09;27 - 00;13;48;19
Unknown
And I got it and they approved it at zero. I was like, this isn't. I just got free money. And I went out and I bought a rental house with that. And that rental house turned into 30 properties today, residential, 350 commercial, $5 million in net worth and like totally expedited my journey. So the reason I knew that bringing you on here is because like you're talking about getting not people, but businesses money at literally 0% up to 22 months, I don't think I can express how powerful that is for a business.
00;13;48;21 - 00;14;09;11
Unknown
You any business regardless, the industry needs capital. They needs capital to buy inventory to grow their business for operational expenses. I mean, you name it, you know, you know, obviously you live in this world, but I'm I was a recipient of that on the personal level. And it literally just skyrocketed what I was able to do and how fast I was able to do it.
00;14;09;14 - 00;14;31;05
Unknown
Now, if I come to you today and you're like, hey, let's get this move in and my credit is okay, or it's bad, what does that process look like? Because there are a lot of people out there flipping houses today that their utilization rates high and their credit scores like, you know, 600 or 6, 20, but it's not that like, where does it need to be?
00;14;31;05 - 00;14;47;01
Unknown
What's the threshold you want to get people up to? What happens if they come to you today and they're not at that threshold? Right. So real quick, I just want to clarify something that the money isn't free because you did have to pay it back. You did. You do it. You have to pay it back to pay the money back.
00;14;47;01 - 00;15;05;04
Unknown
But there's no cost of the interest. Yeah. There's interest. Yes, the interest charges. I call that free money. That's free money. You got to pay the money back. Of course from from compliance standpoint, it's so important that funding growth says you are liable. Yeah. You totally got to pay your money back. And it was a loan. So any loan inherently you have to pay the money back.
00;15;05;09 - 00;15;28;21
Unknown
But normally that's 0%. You're paying the principal and the interest back. In this case you're not paying any interest, which you're still paying the money back the principal. But if you take that principal and you put it into something that produces double over a period of time, you just created an insane 100% return. Exactly. Yeah. Instead of 2 or 3 points on closing 1,314% hard money costs total.
00;15;28;22 - 00;15;50;27
Unknown
It's crazy how that eats away, but, okay, so where do people need to be when they get started? So our entry credit score is a 680 keeping in mind that they look at your personal credit, but then they report it to your business credit. This is actually how you start building business credit. So none of the business credit cards are going to report to your personal credit report.
00;15;50;27 - 00;16;13;04
Unknown
That's really important. Now what if someone has a higher score than 680? If they're well qualified, it's seven 5800. They're looking at getting we have clients that are routinely getting above 300,000 and funding. But if someone's below the 680, then from a business credit standpoint, we're going to look at their profile and determine what is holding them back.
00;16;13;06 - 00;16;38;24
Unknown
Why are they at that? Is it because of utilization ratios? Is it because of late payments interrogatories? If that's the case, then we have to refer them to another company to get those items deleted because funding doesn't do credit repair. But there's sometimes situations where it might just be utilization, or it might be where we can instruct the client on how they can merge cards together to help boost their overall business profile.
00;16;38;28 - 00;17;05;02
Unknown
Then we can help get them up above that 660 or 640 or wherever they are. Build it up higher. A lot of times it simply comes down to utilization ratios. People got a personal credit card at 0% and they use the whole personal card. They were like, wow, this really works. I can get credit cards at 0%. Then they come to us and they don't realize that because they use that personal card, it brought their scores down and that's why they might be below the 680.
00;17;05;06 - 00;17;30;08
Unknown
So just by instructing them about that, about the 35% ratio, they're like, okay, well maybe I'll just use my home equity line temporarily to pay off the personal card there. Their credit report skyrockets. Now they're able to move forward with the business credit process. So part of what we're doing is consulting with the client, educating them on the business credit process, on how that works, how to qualify and then moving them forward.
00;17;30;08 - 00;17;51;04
Unknown
Then we actually do all the applications because we're the master strategist at that. We know from 35,000 clients what is the best order of operations to go about getting you? That's which one of the banks is going to pull this report, which is going to pull that report. And we want to always work together with the card issuers in terms of not violating any of what they're looking for.
00;17;51;07 - 00;18;19;02
Unknown
So it's really important that when doing this process, that all business credit card applications are submitted legally and ethically, meaning that the business has actually reviewed the disclosures they reviewed the terms and conditions, not just fun to go review it, but the business itself, the business owner that's the guarantor that they review. It themselves. And that's a that's a critical thing that unfortunately a lot of other companies aren't doing.
00;18;19;05 - 00;18;40;17
Unknown
They sign up, you sign up for their process, and then they just wham, they shoot out applications for you. So we want to work together with the card issuers. We want to do what they're looking for and never work against what they're asking for. So that that way we don't harm the consumer. The consumer is able to get access to more and more funding, and they're not seeing things like super inflated incomes, for example.
00;18;40;17 - 00;19;07;13
Unknown
You don't ever want to inflate the income. Now on a business card, it's okay to use projections that are legitimately based off of your business plan, that are based off of the area in which you're investing, the price of the properties, the the you know, the deals that you have lined up. In that case, you can use business projections and so these are some of the things that funding Grow Walks clients through to determine their best overall strategy.
00;19;07;13 - 00;19;26;20
Unknown
That's going to yield the largest amount on every single round of funding. And I remember, so there's a lot of people like, not just in real estate but just in general that do something like this. But the reason that I think most of my friends and the people in our community, you typically just work with, fund and grow, is that ethical component of it.
00;19;26;22 - 00;19;42;06
Unknown
There are you could do things the wrong way in this industry. So I think it's really important that people understand that you find you can go on Google and find all kinds of people, do you know, credit this credit card that, but you want to make sure it's somebody who's doing things the right way. It's really important to the consumer.
00;19;42;06 - 00;20;01;06
Unknown
Yeah, I just want to jump in real quick for companies in the last few years have been shut down for doing this the wrong way. There was a company called Growth Cave that just four weeks ago was shut down for doing it the wrong way. Then in November of last year, another company called Seed Capital. They were shut down for doing it the wrong way.
00;20;01;06 - 00;20;19;11
Unknown
Yeah. And for violating the very basic things we're talking about applying for personal credit cards. Inflating incomes, doing things that are completely unethical. And so there is completely a right way of doing this in a wrong way of doing this. And there's a reason why we've been around for 19 years doing it. Those companies were shut down.
00;20;19;15 - 00;20;38;11
Unknown
They didn't even make it past four years. Yeah, I think I think, clearly I think anybody who's in our world and knows seven figure flipping, like we vet the people that we partner with and work with ourselves, everybody that we that is a part of our community and works with people in our community. We have already personally worked with them first.
00;20;38;13 - 00;21;03;12
Unknown
So I think that's just an important distinction. The other so this sounds really, really complicated. There's a lot going on here. So somebody might be thinking, why does us go like Google? There's ChatGPT this and I'll figure out how to do this on my own. Like why what's the benefit of working with funding growth? My opinion is even though I'm personal finance savvy, I've got a good credit score.
00;21;03;12 - 00;21;20;09
Unknown
I take care of my personal finance as well. But this business credit game, there's a nuance to it. This is the way I viewed it, there's nuance to it. So anytime there's nuance to something, there's an ability for me to go faster. I'm always willing to go work with somebody who can help me do things the right way and doing faster.
00;21;20;09 - 00;21;36;02
Unknown
So that was my decision lens for doing this. But somebody might hear this and think, either they're going to do it on their own or it sounds too complicated, which is why they would work with you. Talk to me about that. Like, should somebody just go out and do it on their own? It sounds complicated. Do you guys make it easier for them?
00;21;36;02 - 00;21;56;23
Unknown
Can you talk about that process a little bit? Yeah. Now technically anybody can go and apply for a business credit card. Anybody can go and do that. Now, whether or not you're going to get approved for multiple credit cards in one round of funding and for high limit cards at that. And for cards that carry the 0% interest, that's a whole nother story.
00;21;56;25 - 00;22;16;14
Unknown
So we have clients that come to us. They used I, some of them were as crazy as to put their information into. I and I shot off applications at different banks and they got like 20% interest rate cards instead of going after the 0% cards, they didn't know about the positioning ahead of time. I hasn't put in 35,000 clients through the process.
00;22;16;14 - 00;22;35;29
Unknown
That hasn't generated 2 billion in funding for clients. We analyze all that data. We use AI to analyze the data and to figure out the approval process better and better because it changes from quarter to quarter. And so in order for us to know exactly the best order of operations, we're constantly reexamining all the clients that we've put through that.
00;22;35;29 - 00;22;58;22
Unknown
So another thing I can't do as it can't walk you through the verification and negotiation process, it's never done that. The AI is not interacting with the banks. It's not talking on the phone with the banks. We're not talking on the phone with the banks either, but we're walking the client through that. So we hear all that data in real time of what's working, of what's not working.
00;22;58;22 - 00;23;24;17
Unknown
And we're able to share all of that with all of our clients. So unfortunately, we have had quite a few people that came to us, that tried it with AI. Now we have even more people that came to us that were referred by AI. ChatGPT is one of our, pretty decent referrals and not our largest refer, but refers quite a few clients over every month where people just going on to ChatGPT and asking about funding.
00;23;24;17 - 00;23;53;21
Unknown
And then once they realize the the complexity of it, choosing to want to use our mentor that's already been through it, that's actually done it, that has a real track record in it. So yeah, I wouldn't I wouldn't recommend that someone use this. You can use AI to learn about a lot of stuff we do too. But in terms of actually knowing like what are all the best banks like, you can go on to AI and ask it a question and you can say like, what are all the banks that offer 0% credit cards?
00;23;53;23 - 00;24;10;03
Unknown
And then it doesn't even bring up all of the banks. Some of them are in local footprints, like, if I live in New York, there's a whole list of banks that are just for the geographical footprint of the of the northeast. There are some that are just for the Midwest. There's all of these different footprint banks. Then there's the major lenders.
00;24;10;05 - 00;24;23;21
Unknown
And for some reason, I mean, we've all used AI and come and got crazy responses back. You don't want to trust your credit to that. It is a good place to start. You can learn a lot about it. You might want to use it to vet out a company to figure out what your company's going to be.
00;24;23;21 - 00;24;48;04
Unknown
The best to use. And again, it's not that people can't go and apply for a business credit card, but you can also go and try to fix your car and you might mess that up too, right? Yeah, I think it's a nope. For me, it's a no brainer to take the path that gets you somewhere the fastest. And I think for people who hear this and it sounds complicated, that's why you would reach out to fund and grow and talk to them or, work with an expert to potentially help you with the process.
00;24;48;04 - 00;25;09;10
Unknown
So let's talk about the use of this money. So these are credit cards. And I think in the typical sense as a house flipper, we think about what can I use a credit card for to help me pay for a deal. Now the easy one is buying materials for your flips. Because those come from Home Depot or Lowe's or places like that where you can swipe a credit card.
00;25;09;12 - 00;25;29;26
Unknown
But there's often times you have to pay contractors or, different people who don't have the ability to pay to charge you with their credit card. Is that helpful for this? Like, what could I do in those situations? Yes. So that's a great question. So we teach our clients how to use a business credit card like a line of credit.
00;25;29;29 - 00;25;57;10
Unknown
So there are payment services out there. Like for example one of them is called plastic.com. And that's the word plastic with a Q at the end. I guess if we were French we would call it plastic, but we're not. So yeah. So that's one of the Amelio payments is another one. Bill.com is another one. Honestly guys there's so many of these different payment services out there now, these services are approved by the card issuers to be able to run these transactions.
00;25;57;14 - 00;26;19;27
Unknown
So if I'm working with an electrical contractor and they don't accept credit card, I can take my invoice and I can take my credit card to plastic icon, I can put my credit card or even a series of credit cards in there. I can upload the invoice. Then I determine if it's a $10,000 invoice. I can say I want to pull 2500 from this card and 7500 from that card, and then it will say, well, how do you want to pay it?
00;26;19;27 - 00;26;46;20
Unknown
Do I want to pay it through ACH or wire or send a check overnight. And you determine your payment method and then it facilitates the transaction legally and ethically. You're you're able to use the payment services that are approved to run those transactions. You don't ever want to try to use your own PayPal account, or use your own merchant account to charge your own credit card that that violates the card issuers rules.
00;26;46;27 - 00;27;14;17
Unknown
And so the way to do it, and by the way, it's the same price. It's the same cost. It's a 2.9% transaction fee to use those services. And that's what most people's merchant account with charging with PayPal would charge you. Right. They're going to charge you that that same amount. So you not only can you pay any type of a vendor or a merchant or a business, whether they accept credit card or not, you can use that, that method, that service, you can use plastic.com or Meglio payments.
00;27;14;20 - 00;27;38;26
Unknown
You can also use plastic.com to fund an escrow account directly. Wow. Okay. Tell me more about that. Well so we talked about funding an escrow account. So I'm going to buy a house. I'm getting ready to close on it. All of our money to close on that house goes in escrow. So how could I use credit cards? A 0% credit cards where I'm not paying 12 into to help fund that account?
00;27;38;28 - 00;27;58;12
Unknown
Yeah. So you would go to plastic.com. You upload the different credit cards that you want to work with. So let's say that you are at five different cards from funding grow. You would take those cards, you enter them into the system. Then you take the closing statement. You upload it into plastic. Then you determine how much of the funding from each card that you want to use.
00;27;58;14 - 00;28;18;06
Unknown
Then they send a wire that shows up to the escrow account and the title company doesn't know. You know that that was a cash, you know it was that cash. They have no idea. All they see is an incoming wire. Now, if you have a mortgage company that you're working with, then they may ask, where did this money come from?
00;28;18;09 - 00;28;45;16
Unknown
So many hard money lenders, they don't care that you're using a credit card. But you have to check with your own lender to determine, because sometimes there's going to be seasoning and documentation of where the funding came from. So some mortgages may not allow the use of an unsecured credit card for that. Right. But nonetheless, you can use plastic.com to fund any escrow payment you want.
00;28;45;19 - 00;29;03;27
Unknown
So the question is whether or not, if you're using it in conjunction with a loan, whether or not they allow it. So if you're buying a house outright and you've already taken the money from your last flip, and you put it into that escrow and you're buying it cash and then you just need to supplement an extra 30, 50, 70,000, you could pull it right off your cards and put it into escrow.
00;29;04;00 - 00;29;31;04
Unknown
So so that's like you can actually use your cards to get gap funding. Now a lot of investors use private money lenders and maybe the purchase of the house. And then they're using different capital for the rehab. Another thing that often happens, and I know people listening to this or thinking of this is if I go to buy a $100,000 house and I have a $50,000 rehab, and I go get a regular private money lender like you, lend me 150 grand for the whole deal.
00;29;31;06 - 00;29;50;05
Unknown
You send 150 grand to the escrow company. The escrow company closes that out on the closing statement and sends me the additional 50 grand for the rehab back to me. So I get the cash back, and then I use that money to pay for the rehab. Can I use the cards in the same way? Is that possible? I believe so.
00;29;50;06 - 00;30;14;27
Unknown
That's that is I mean, your funding, your, you know, your entire deal through putting the money into the, into escrow and there's no limit. Plastic doesn't have a limit for funding an escrow account. And it's not like a specific stated purpose. Anything that an escrow account would be used for. It's really only when you're funding a escrow account in conjunction with a loan that the loan company itself might ask where that money came from.
00;30;14;27 - 00;30;32;29
Unknown
I mean, you've you've had to document for payments, and we primarily use private money, so it wouldn't even come into play. Usually that's like not even a conversation that works out. Is there a second position like that's usually not. We're just like being as upfront as possible. Some people might use a mortgage, but if you're using private money, most hard money lenders, they're not going to care about it.
00;30;33;01 - 00;30;53;14
Unknown
So yeah, I think it's when you're like getting into that DSR loan or you're getting into like a traditional conventional loan. And like you said, some hard money lenders are very particular about what other money is getting into the deal with them. So the best the best thing I can tell everybody is whenever you're using loans, number one, be responsible with capital, regardless of where it comes from.
00;30;53;22 - 00;31;20;24
Unknown
But number two is always be open with your communication wherever the capital is coming from. Exactly. A hard money lender and I want to put somebody in second position. I'm going to have that conversation early because what happens is I see this in industry a lot. People start to use these capital stacks of hard money with maybe some personal funds or hard money and private money, or now hard money and some funding grows zero business credit cards, and they don't tell the first position lender that they're using other capital.
00;31;21;01 - 00;31;37;04
Unknown
And they find out right before closing and it blows the deal up. So you have to communicate that upfront early and often. And look, be okay that some lenders are going to tell you, no, I'm not good with that and try to work with the ones that do allow it. Yeah. And now people might be thinking, well, well what happens after the deal?
00;31;37;11 - 00;32;01;10
Unknown
Like now? Now I'm just paying down the 0% cards. Well, once you've once you've purchased, once you've rehabbed, once the property stabilized and you, let's say use a DSR to cash out you, then you now pay off all those cards and you're either in a good position to be able to reuse the cards. Now, how many hard money loans allow you to reuse the funding, right?
00;32;01;10 - 00;32;21;14
Unknown
Without any points, without any coming back to you? Yeah, exactly. It is. Boom. It's just available. And so often investors money is frozen in their last deal and they just can't move forward. And so even if it's the cost of, you know, major points that you're paying and just difficult to get into that next loan because you got all this paperwork you got to go through.
00;32;21;16 - 00;32;41;14
Unknown
Well, once you paid off those cards, they're now completely available. And many of them are at 12 months, 18, 18 months, a couple of them even at 22 months. So you're going to be able to reuse it over and over again, do multiple deals. You keep on doing that process, purchase, rehab, rent and then pull your money out, pay off the cards with, you know, with permanent financing.
00;32;41;22 - 00;33;00;19
Unknown
Yeah, that's like super, super powerful. Though the velocity of the money from the 0% interest cards is way better. Number one, there's no interest, which is like an insane value, but the like just a bit of get that money back and redeploy it without having to do a whole bunch of new documentation and ask for hard money. Like it's insane.
00;33;00;19 - 00;33;20;26
Unknown
Like, I hope people hear that go, that's insane. I need to do that. Let me ask you this. Let's talk about some other use cases. So it's really amazing to build a fun escrow account. I talk to a lot of business owners early on. They get into real estate and they start to learn the game and to build a business, there are going to always be operational expenses.
00;33;20;26 - 00;33;39;08
Unknown
So I think about the new investors who are going direct to seller. They have marketing costs, they have software costs, and it takes probably 6 to 9 months to really get the business up and running and bringing money back into it, but you have to spend some money to do that. I know a lot of people on the internet say you don't need any money to do real estate.
00;33;39;08 - 00;34;02;16
Unknown
That's quite frankly B.S., I think we both know that you do need to be capitalized to do real estate, but there are ways to get that capital. How have you seen people build businesses using funding grows one of their capital sources. So marketing is huge, just absolutely huge to be able to use it for all, all sorts of different marketing, a lot of marketing that people are doing nowadays.
00;34;02;16 - 00;34;24;16
Unknown
I know you guys are pay per click marketing. When you do pay per click, when you're advertising on Instagram or Facebook, don't you have to use a credit card? Yeah. Oh yeah. And there's there's larger businesses probably like you guys that are doing upwards of 100,000 a month in pay per click marketing. What better use would be to use a business credit card that gives you 3 to 5% cash back?
00;34;24;19 - 00;34;46;13
Unknown
It just drops the cost of your marketing by up to 5%. And so marketing is huge. Now, when someone's getting into real estate investing, they may not have the upfront capital for what ends up being one of the most expensive parts of a flip, which could be payroll and labor. So these payment services are perfect for paying payroll.
00;34;46;16 - 00;35;12;17
Unknown
They allow the the use that that's a perfect use case for plastic or familial payments is to pay labor costs. And so you can directly fund your your rehab team with not only any vendor or any contractor, but you can directly fund the labor itself, which again, could be 40, 60%, you know, like in Rippling or Gusto or one of these payment services where you're paying W-2 out exactly, exactly.
00;35;12;17 - 00;35;29;25
Unknown
Yeah. So now that might not be ideal long term because you might say, well, pretty soon I'm going to have the capital to be able to do that directly out of my account. And many people do, but many people want to run it through the credit card in order to get 3 to 5% cash back. Anything that you're running through the card, you're just dropping the price of it by 3 to 5%.
00;35;30;02 - 00;35;53;27
Unknown
And you might think, well, how is it that they can even give you it's like, this sounds ridiculous. Adam and Ari are telling people that they get 0% funding, and they're going to get 3 to 5% cash back. How is the bank making any money on any of this? And the answer is, is that banks are not only making money on the interest rate, they are making money on the interchange fees.
00;35;54;00 - 00;36;21;03
Unknown
So every time you go to Home Depot and you buy materials and you swipe that card, Home Depot's paying 2 or 3 to 4%. Every merchant pays a different fee. They're paying every time you swipe that card. The banks are making billions of dollars off of the interchange fee, off of you simply swiping the card. They want as many business owners to be out there with business credit cards, swiping that card, swiping that card every time you swipe it.
00;36;21;07 - 00;36;40;27
Unknown
They're making more money. And so people often forget that they're it's not just the interest rate on credit cards. It's also the fact that you simply by swiping the merchants, paying a fee, you they split that fee with you and you get some of that back as cashback. Yeah. It's it's like it's a super cheat code. It's a straight up cheat code.
00;36;41;03 - 00;36;59;19
Unknown
But let me ask you this because I know people are thinking it, I get it, I get I come to fund and grow. You help me get my business credit set up, you help me get funded three rounds and I'll have how many credit cards at the end of that? That could easily be up to 15 cards. Okay, we do about five cards per round and we help people organize that.
00;36;59;23 - 00;37;16;19
Unknown
And we keep track of the 0% period of time. So right now we do that with the spreadsheet. But our since we're in the process of updating, you've worked with us. So you know that we have very complex we have a client logged in, make it very easy to sign all the documents. Everything's organized and they're complex on your side.
00;37;16;19 - 00;37;35;22
Unknown
So on my side. Very simple for the client, but complex on our side. Yeah. We've spent literally millions of dollars per year in developing our software. Yeah. Great. For, for our employees, for our affiliates, for our clients. And so one of the things that we're now working on building in is actual text message and email reminders about the 0% periods of time.
00;37;35;22 - 00;37;51;25
Unknown
Yes. Brilliant. I love that because you do have to pay these cards off. Now what happens? So I get 15 cards and we're in a year or two, and these cards start coming back to the normal 15 to 22% interest rate or whatever they end up being that. Then am I just stuck with like, do I keep those cards forever?
00;37;51;25 - 00;38;13;24
Unknown
What do you tell people to do after that period? So once the card has an interest rate and you no longer want to swipe it and use it, so you've done your last deal. You've gotten your doctor, you've paid off the cards, and a month later, the interest rates are about to hit. What we would do is we would advise the client to, of course, sign up with fund to grow again.
00;38;13;27 - 00;38;36;08
Unknown
And what we would do is we would put them through more rounds of funding. Now this is a super hack here. If you apply, Bank of America and let's say that you have a $50,000 card that you got through funding, grow and the 12 months a 0% has expired. Well, we're going to take you back to those same institutions, especially if you've used those cards responsibly.
00;38;36;15 - 00;38;57;12
Unknown
You've had the proper utilization ratios that funding growth teaches you. We're going to apply at the same institution. Now let's say that they only give you 25,000 on the new card. They say, listen, you already have a $50,000 card that you're not using is completely paid off. So we'll give you a $25,000 card. But we want to keep our total exposure at 75,000 with you, 50,000 on the old card, 25,000 on the new card.
00;38;57;15 - 00;39;23;12
Unknown
That's perfect. What we do is we teach the client how they can merge the old $50,000 card into the new $25,000 card for a $75,000 card at 0%. This is the only way to take old credit limits and recycle them into new cards, and keep and be able to attain the 0% over that entire account. Now, the old account, of course, is going to go down to zero.
00;39;23;14 - 00;39;46;18
Unknown
Sometimes they make you keep like 500 on that account, you know, just to keep it open. But you have to keep it open. Sometimes in that process the bank wants you to, to, to keep it open. But then on a separate call, the client could always call it and close it. Okay. But on that migration where they're moving the old limit over to the new one, the and the bank sees it as your total exposure.
00;39;46;23 - 00;40;09;27
Unknown
So there's times where clients may already have over their lifetime, built up to 50,000 or $40,000 cards on their personal report. And it might be with Chase or American Express or Bank of America. And then when you apply for the business cards, the same thing applies. You can migrate over limit from the personal cards that have a 22% interest rate on to your new 0% business card.
00;40;10;00 - 00;40;33;17
Unknown
And so this is super popular to be able to take old limits that are essentially unusable when you're paying a 20, unless you're paying it off that entire month, it's unusable at 22%, right? Yeah. Which is pretty typical of credit cards. And to be able to convert it back to 0%. So that's one of the reasons that people will sign up for, fund and grow and have our negotiators walk you through that process.
00;40;33;23 - 00;40;49;05
Unknown
And it's super simple. It's easy when we explain it. But, you know, on each different bank it's going to be a little bit different. Yeah. So it's going to be like, oh you have to call this number and you have to talk to this underwriter and ask them this. And if they say that then this is what you want to explain to them.
00;40;49;09 - 00;41;08;00
Unknown
And then boom, they then process the transaction for you. They merge them together or they, you know, whether it be asking for a higher limit, whether it be a verification, whether it be a merger, all of that is just super critical. You're not going to get access to high limit business cards without doing all this other legwork.
00;41;08;05 - 00;41;30;16
Unknown
And back in 2020, I'll admit it was a bit easier. Getting higher limits, quicker, easier, less legwork. Now, in today's market, there's a lot more legwork that goes into it, right? Yeah, I tell people all the time, they're looking for liquidity. Their business is cash and cash constrained at times because of how they're managing their capital. They're they're not managing it correctly in terms of how they use debt.
00;41;30;16 - 00;41;47;27
Unknown
Using debt is a skill you must have in our industry. We're a very capital intensive industry. So different cap. We we teach people all the time like you need hard money lenders in your pocket. You need private money lenders in your pocket. You need cash in your bank and you need credit. Yeah, like you need that for things.
00;41;47;27 - 00;42;18;23
Unknown
And then what I just heard over the last few, you know, 20 minutes or so is I can pay my big for expenses using these funding grow 0% card. So paying no interest on this money. So that's payroll contractors marketing expenses plus other typical CapEx and escrow directly to buy a deal. This whole thing. Yes. You will have 10 or 15 cards at the end of this thing, but you now have a new capital system inside of your business.
00;42;18;26 - 00;42;40;10
Unknown
And just like any system, you create a process. You have management, you track dates. It's it's worth getting money for 0% interest and the ability to continue to matriculate that forward and fought and fought and fought and keep rolling it in and and adding to that. And as you expand your business credit, what other opportunities open up for you?
00;42;40;13 - 00;42;55;29
Unknown
How do banks then now see me, and what will banks be willing to do when they see? I've been super responsible with lots of bank credit consumer not consumer debt, but business debt. I've done it right. I've done it the right way. I've done 2 or 3 year rounds with Fund and Grow. What can I go and then ask the bank for?
00;42;55;29 - 00;43;16;10
Unknown
What else can I get? So this is a perfect question because this is exactly what happened to me. I started with business credit cards. They reported to Equifax and Experian business reports. They reported to Dun and Bradstreet. They built my paid score. Well, pretty soon I was able to go for another form of funding that businesses use called corporate credit.
00;43;16;17 - 00;43;37;15
Unknown
So corporate credit is different than business credit. Now, corporate credit is completely non-recourse. They're not actually even looking at your personal credit score because at this point, you've built your business credit report to the point where they're not going to even check with your personal credit. So like the funding grow building was a commercial mortgage that I used.
00;43;37;18 - 00;43;59;12
Unknown
It was $1 million building. I didn't have to personally sign for it. I didn't have to put my name, my Social Security. They didn't check my personal credit. There was no recourse against me personally when purchasing that. And I was able to use a corporate mortgage, a corporate credit mortgage, and the with with that, you do need to have your your business credit built.
00;43;59;12 - 00;44;25;25
Unknown
First. You need to have exposure on your business credit accounts or on your business credit reports. But then you also need to be making you can't be a startup and get access to a corporate mortgage like like I did. And then I bought another three unit building using a corporate mortgage. So that's great for commercial to be able to use corporate mortgages, and you're going to be able to get much larger amounts, 800,000, a million, even more than that.
00;44;26;02 - 00;44;45;09
Unknown
And, you can use business credit cards for the rehab for smaller properties. Then once your business grows, your credit report expands, your business credit report expands. Now you can move forward on getting access to corporate credit. But again, you do have to have revenues and two years of tax returns to support the corporate mortgages. So you use this business credit.
00;44;45;09 - 00;45;06;26
Unknown
You get the revenue coming in. You've got to you have some expenses associated with that. The business credit takes care of that. You get the revenue coming in, you're responsible with it. Then you can upgrade to corporate credit. What about like, like I have $100,000 business line of credit in my real estate business, and we use that all the time just to cover cash flow or make sure that in between something we're never strapped for cash.
00;45;07;00 - 00;45;26;25
Unknown
Does this help with potentially getting business lines of credit as well? So it does. It does now because that line of credit reports said the same bureaus that the business credit cards do. But when you got that, you had to show financials to get a line of credit. A line of credit is is markedly different than a business credit card.
00;45;26;25 - 00;45;46;28
Unknown
Business credit cards could be for a startup, or it could be for a company that's doing 25 million a year. And so with lines of credit or with mortgages, you have to show financials. With business credit cards, it's stated income. They're not asking for you to produce tax returns. Now that doesn't mean that we're dishonest with the banks.
00;45;47;00 - 00;46;10;01
Unknown
But you can use business projections and you're not having to show tax returns. So it works really great for startups. And it's and it's just generally a quicker, easier process, lower barrier to entry. And I think once you start building that credit, that revenue and you got those two years of tax returns, now you're just opening up the corporate credit lines, the business lines of credit, like, and here's here's the crazy thing.
00;46;10;01 - 00;46;33;20
Unknown
And this has happened to me. It's like you're skinny at first. You need some capital. You need to build the capital stack. You get some hard money, you get some business credit cards, you find some private money lenders, you start to create more and more revenue. So now you're actually making more cash because of it. And you could start from essentially nothing, build up this cashless revenue machine and then it opens up more capital.
00;46;33;20 - 00;46;55;05
Unknown
And the more capital you have, the more money you make. If you if you take this outside of real estate, like we operate in this space and people listen to this podcast are like buying a deal, buying two deals, doing a hundred flips here, whatever. There are people starting businesses out of the gate doing $30 million, and they're doing it all on debt, and they might be spending $30 million to do it.
00;46;55;07 - 00;47;15;22
Unknown
But if you look at how venture capital employees into these businesses, they understand that debt is required for a meaningful amount of growth. Now, how you use the debt, whether or not they're responsible, if they go, you know, upside down, that's that's a totally different story. But this is a tool that if used appropriately, can be incredibly powerful.
00;47;15;22 - 00;47;36;24
Unknown
Shorten that. You know, 20 years, it would take somebody to build a mom and pop business to 5 or 10 years. Yeah. It is really, really powerful. Let me let me ask another question. I've had this ask to me before, and I would just like to hear from the man himself, what if I have partners and on an operating agreement and I want to come get business credit, let's say I'm like an 800, I'm a ten.
00;47;36;24 - 00;47;56;29
Unknown
I'm goal, then my partner 730 and I got another one that 680. What happens to me then. So from time to time fund and grow run specials where we will allow you to bring a partner on to your membership at no cost. So in that case, what you could do is you could add your partner into the funding grow portal.
00;47;57;01 - 00;48;16;00
Unknown
And then we would put both of you through this business credit building process. And so if you have a partner there on your entity, they have good credit. You might be unlocking double the amount of funding. And so we actually those promotions that we do, we did one with you guys a while back. Those are super popular.
00;48;16;05 - 00;48;36;23
Unknown
A lot of times people are jumping on that. They're adding their partners. They're able to, you know, just double the amount of funding. Sometimes partner A might have a something holding them back on their profile, whereas partner B has a great profile and they're ready to move forward right away. So they get funding to roll in through partner B right away, while partner A is getting their profile amended and worked on.
00;48;36;23 - 00;49;00;21
Unknown
And then so a partner is not going to hurt partner, be a partner. You can still get those three rounds and get up to 300 K. But if we get partner a squared away he might get get another 150 300 K additional because you now have two people on that. Is that one them. Exactly. Yeah. And we're going to work with them for three rounds even if it takes a little bit of time to help them get to the place where they can be fundable, we're going to work with them.
00;49;00;21 - 00;49;20;00
Unknown
There's some times where if someone is in a really bad situation and they just their profile doesn't look great and they only get lackluster results on their first round, we're just going to do additional rounds of funding for them, right? That's why we have so many positive reviews out there. You know, there is no reason to not just give people extra service, make them happy.
00;49;20;03 - 00;49;35;20
Unknown
That's how you get them to sign up again. Yeah, I think that's I mean, you guys are your reputation is impeccable in the industry. I think that's why so many people are attracted to you guys. If you're hearing this and you're like, okay, well, I want to talk to these people. We'll drop a link for funding grow. Directly from us.
00;49;35;20 - 00;49;53;20
Unknown
And I think we have, I think we have a discount code too. So that'll all be in the show notes. Like you just get on there, put your information, you talk to their team. It's really awesome. Like, we went through this and it's super, super powerful. So I'd encourage you guys if you're thinking like crap, I do need money for my business.
00;49;53;20 - 00;50;09;20
Unknown
I am a responsible user of credit and I do. I know if I do this, it's going to help my business grow like that. You. Then you got to click that link and check them out. It's really important. All right. Aside from learning more from you on that link, what, are you guys active on social media? What else are you guys into?
00;50;09;21 - 00;50;38;01
Unknown
What else are you guys doing right now? Yeah. So our our, YouTube is pretty active. We do great podcast. I want to have you on the podcast. We have a big following on Facebook and on Instagram. So we're pretty active on those platforms as well. And again, I want to emphasize the, the consulting aspect of funding grow, where not only are we getting you capital, but we are helping you with all of your financial questions along the way.
00;50;38;03 - 00;50;59;14
Unknown
We are helping teach you about it. We have people that have gone through finance courses in college, and I just saw this is one of the communities, actually one or the other school communities that were part of where they were asking about funding grow. And someone went on there and said, I have a finance degree, and what Fund and Grow taught me was far beyond what I ever knew about business credit cards.
00;50;59;16 - 00;51;19;12
Unknown
Oh, yeah, it's nuanced. It's it's, it's it's corporate knowledge of how things actually work in the real world that no college can teach you. Yeah, yeah. It's like it's like the the people that are teaching but not ever doing. Right. They're never doing deals. They're just teaching you the deals. And it's like, okay, you can tell me from a technical standpoint, but what about from a doing standpoint.
00;51;19;12 - 00;51;52;05
Unknown
Right. So yeah, it's awesome man. Well, I, I totally respect your time. I'm super grateful that you came here in person. So we could do this podcast. And we're only far from each other. So it's pretty cool, man. Thanks for coming on the show today. Thanks for having me. All right. Thanks for listening to the Seven Finger Flipping Podcast, if you liked it, if you liked what Ari had to say about Fund and Grow, I want you to go to the link in the description, talk to those guys, get business capital in your business today so that you can grow your business and actually get the level of freedom that you're looking for.
00;51;52;10 - 00;51;54;09
Unknown
Thanks for listening and I'll see you on the next one.
