Seasoned LLCs - A Great Place For Investment Equity!

For people with an unstoppable vision and desire anything is possible. And it is just a matter of time before the way will present itself. One of my friends just started a business brokering seasoned LLCs. Why is there even a market for seasoned LLCs? Because an established business can acquire financing that new business cannot. What does that mean?
A new business has no track record and the lending industy isn't very excited to take a chance on a business that is just trying to figure things out. But the same business, in 2-3 years down the raod is no longer "new." That means they have worked through the initial start-up problems and have survived so now they are worth taking a chance on (less risk). These companies can usually get SBA loans and Business Lines of Credit around $40-50K and very reasonable rates. (Keep in mind this is intended to be business debt, not commercial spending money.)
A saavy investor can purchase any number of seasoned LLCs and each LLC can get it's own line of credit up to $50,000. If they invest it with a company like ours they can take 2 LLCs ($100,000) and invest for 2 points, 12 % and 5% of the net profits. That means they can get $2,000 (for points), $12,000 (for interest for the year), and $5,000 (of the net profits) or something is the range of $17,000 return on the investment. If it costs 7% to borrow the money (or $7,000) and you make $17,000 then you have made an extra $10,000 for the year! Not bad considering that none of the invested money was actually your in the first place. And just about any one can qualify for this type of investing if they have better than average credit (680 FICO score or better).
I've been excited about this idea for a couple months now, ever since I learned about the power of seasoned LLCs. But it wasn't until this week that I discovered a consistent source of seasoned LLCs that could be purchased at will. This can be a powerful resource for investment capital for my real estate projects (based on our Foundation to Success criteria).
Consider...if each client had just one seasoned LLC with $50,000 in available credit...how many projects could be purchased? What if we combined this concept with the Equity Builder Program? Each tenant works to improve their credit to be able to purchase their own home. Once their credit is good enough to buy a home they would also be in a position to become an investing client using a seasoned LLC! If they added an additional $10,000/year in investment income, that gets pretty close to paying a reasonable mortgage payment...so once their credit is good enough they can start investing and the investments would pay for the house they just bought! And it would provide a new source for $100K investment capital on a regular basis!

Equity Builder Program in Action

The Equity Builder Program (EBP) is an amazing tool to help everyone achieve a win-win transaction. The premise behind the EBP is that it works like a rent-to-own (or lease option) but without a specific property to purchase.

The tenant gets an opportunity to build credit toward the purchase of a property while they work through whatever credit issues they need to resolve before buying their home. Imagine, they pay down more principle through this program than if they actually purchased the property!

The owner gets a higher than market rent, has long-term tenants, cash-flow property and an easy to manage property. The tenant must behave in order to get the purchase credit. It makes an average deal a great opportunity!

I have been trying to get a house rented in a traditional fashion for nearly a month. There have been several lookers but no takers. The home is old and needs some updating. We found a family that is struggling with credit issues due to a recent divorce. They are trying to rebuild their lives and need a place to start. They now have a house big enough for the family, building equity, have a home they can eventually purchase and they are thrilled to death. We have a house that would just break even that is now has a positive cash-flow, tenants who proactively want to improve the house and reduces the management headaches of the property. This is truly a win-win situation.

(We advertised this house for rent at $1,050/mo, $1,000 deposit, 1 year contract; we rented it for $1,250/mo, $1,500 deposit, 2 year contract)