How Real Estate Investors Use Business Credit to Fund New Construction

Shawn Chambers (00:00)
The highest amount that I have seen on the real estate side has been an associate of mine who’s obtained about 500K in 0% interest products. That was over the duration of, I want to say three to four months at a multitude of different banking institutions. And I have to reiterate that the patience of the client is really what’s going to be the most beneficial factor in that scenario.

Dylan Silver (01:57)
Hey folks, welcome back to the show. Today we’re joined by Shawn Chambers, the founder of Capital-Elevation Enterprises

In South Florida, where he helps real estate investors access funding through creative financing solutions and strategic lending relationships. Shawn, thanks for taking the time today.

Shawn Chambers (02:16)
No problem at all. How you doing today, Dylan?

Dylan Silver (02:18)
I’m doing well and well, Shawn Dion here. Many investors believe that a lack of capital is what is holding them back from scaling in their business. What do you see as the fastest solution to that problem?

Shawn Chambers (02:34)
fastest solution to obtaining capital for a real estate project, whether it be an acquisition transaction, renovation funds, or just bridge financing overall, in my opinion, would be zero percent interest business funding, traditional business lending as a whole. So our borrowers who understand the importance of having a strong credit profile, low DTI ratio.

You can leverage your personal credit score, personal credit profile to get access to anywhere from 50 to 100K capital in as little as, let’s say, three to four weeks, right? Now, that being the lowest barrier of business funding is very easily obtainable, right? It is very flexible, being that you can use it for purchasing material, ⁓ closing costs, the acquisition of a property to a title company. ⁓ it seems, in my opinion, to be the fast track.

Route to securing a property.

Dylan Silver (03:26)
Now when you mentioned zero percent, break that down for us. What does that look like on a granular level and what’s the process of securing that?

Shawn Chambers (03:33)
So a zero percent interest funding a zero percent interest funding product is typically a business credit card, right? So you have institutions like Chase Bank, Citizens Bank, Bank of America, and Wells Fargo that will provide you with a business credit card at zero percent interest for a twelve to eighteen month period, ranging from amounts of anywhere from 10 to 50 K in capital, right?

So if you have a 700 plus credit score, a properly structured credit profile, you can access 50k capital from one bank, right, at zero percent interest for the duration of 12 to 18 months. What we do with this product is we go through what we call a stacking sequence. So in that stacking sequence, we would take a client to three different banks, secure three of these 0% interest products, and basically stack those limits. So

If we’re able to secure a if we’re able to secure, let’s say, a minimum of 25K from each bank, right? Which is very easily obtainable. ⁓ at three different banks, that would be a total of 75K in deployable capital at zero percent interest, meaning that your minimum monthly payment would be typically one percent of your outstanding balance. So if you have twenty five K in capital, you’re paying one percent interest on a monthly rate. That would be about two hundred and fifty. Let’s call it

no more than four hundred dollars on a monthly payment. You can use this capital in order to purchase properties, purchase materials to renovate a property, or facilitate any other need necessary for your project at a low interest rate, providing you with flexibility in order to get your deal accomplished, get your deal going, get you to the next draw phase, anything of that nature.

Dylan Silver (05:15)
Now, when we talk about credit that I’m familiar with people being able to utilize the the money on their card really for anything, right? And so you can effectively take it out as cash, but not through a cash advance. I’ve heard of people doing this through third party services like say plastic. I’ve heard that as being one. Is that typically the process that you recommend clients follow?

Shawn Chambers (06:27)
yeah, so you can definitely go through a third-party liquidator. I know Plastique and Melio were the go-to sources for that type of thing back in about 2020 to 2022. As of right now, the company that my team currently uses is called Cashew Pay. So they’ve actually been around for a couple years now. The the founder of that company is actually close founder, is actually close associates with my mentor himself.

So they facilitate the same services as Plastique. They will allow you to liquidate capital from a personal or business credit card. Their turnaround time can be as quick as 72 hours, and they’re currently working up to a maximum of, I believe, about $50,000 per transaction. So if you’re looking to liquidate anywhere up to $50K in capital in 72 hours at an 8% interest rate, they can provide this in, you know, with a quick turnaround time.

Dylan Silver (07:22)
What are some of the use cases or opportunities that you see real estate investors using credit stacking for?

Shawn Chambers (07:28)
So we see real estate investors a lot of the time utilizing this stacking sequence in order to get into new construction. new construction being one of the highest levels of real estate investing, you know, it typically tends a higher amount, it typically requires a higher amount of capital in order to get into that ⁓ into that field, right? So the typical route of going through a hard money lender providing 40 to 50% down on the land acquisition costs.

And then receiving 100% financing for the rest of the construction costs can be a bit encumbersome for some of our new real estate investors who are just new to the playing field. So, in that scenario, what we would advise them to do is to go through a stacking sequence such as this, acquire anywhere from 50 to 100, sometimes 150K in capital, which would provide them with the 40% down that they need for the land acquisition.

And provide them a little bit more breathing room for things such as their architectural plans, permits, ⁓ hiring a GC, getting their surveys completed. ⁓ it really is a great tool in order to get the ball rolling. And once you can show your hard money lender after you know acquiring the loan, putting the 40% down to the land that you got to the first draw phase on your scope of work, and they provide you with the first draw of your construction loan.

You know, it basically will jump start your process and get you building ASAP.

Dylan Silver (08:55)
When we talk about the process in new construction, there’s a lot of variables that come into play here. And part of this is also there’s a some level of expertise that you need in new construction versus fix and flip. When folks are coming to you and asking for access to capital, how many of these folks, specifically when we talk about ground up new construction, are doing this as first time.

you know, new construction operators versus more established folks who are using this as a way to ⁓ add fuel to what they’re already doing.

Shawn Chambers (09:30)
So the beauty about zero percent interest funding or funding overall is that it doesn’t discriminate, right? As long as you have a clean profile and you know the data points of what you’re looking to apply for, you can easily obtain the capital needed. That being said, we see new real estate investors, we see experienced real estate investors utilizing the same strategies in order to secure the capital needed for all of their projects.

Right now, we’re currently working with a couple different mentors in the new construction field. They typically help new real estate investors get into the industry at a price point of building 300 to 600K homes. But we do also have a mentorship program that we associate with, which helps real estate investors new, starting from the ground up, get into building billion-dollar homes. Right now, on ⁓ the other side of the coin, we do have experienced real estate investors.

Who may be over-leveraged by too much debt. Their debt to income is currently too high on their personal credit, just exhausting different means of securing capital in order to acquire new properties, right? There are strategies that can be employed on every level that can help any level of real estate investor accomplish what they’re looking to accomplish.

Dylan Silver (11:19)
Now, when we about the life cycle of these deals, it’s not just a matter of being able to find the deal and sell the deal. There also comes into play holding costs and unforeseen ⁓ expenses that come up. Have you seen that real estate investors will utilize ⁓ access to this type of capital in those situations, or are they using it more so to quite literally fund deals and, you know, take out the money as a form of down payment even on property?

Shawn Chambers (11:47)
So when it comes to the holding costs, those kids, that can be what, you know, makes or breaks a deal. It could send you over budget. It could, you know, definitely alter the flow of your construction process, right? We have a strategy we use where we do utilize these zero percent interest products in order to cover the holding costs and with along with a mixture of, you know, front loading your construction budget and your scope of work.

in order to assist you with making the interest payments until you get to the end of your construction loan. One of the other products that we advise real estate investors to look into would also be a business line of credit, right? So a business line of credit, whether you have an LLC that was established two years ago or you just recently acquired a shelf corporation, both of these products can be obtained and can provide you with that revolving line of credit that you need to be able to

Pay for your construction costs, pay for your material, pay off your contractors, cover your holding costs, right? And then once you get a draw back into your account, replenish that revolving line in order to once again do it again. So the main question is more so about approve getting approved for the right limit that you’re looking for. If you can know what your numbers are and know how much capital you need, secure that amount.

you can float the holding fees throughout the duration of the construction process until you can get to a point where you can either refi or if you’re pre-sold on the market or if you’re listing on the market and looking for a new buyer.

Dylan Silver (13:23)
What’s the largest credit stack that you’ve seen as far as a dollar amount that someone has been able to stack up?

Shawn Chambers (13:30)
So personally, the highest limits, the highest credit stacking limit that we’ve been able to attain for a client has been right around 150K. That is typically our ballpark. Now, that is somebody who is qualified and very strategic and patient in the process of applying for funding, right? Now, on the other hand, I work in a community of loan brokers such as myself that facilitate small business lending, real estate investing, and a couple of other products, right?

The highest amount that I have seen on the real estate side has been an associate of mine who’s obtained about 500K in 0% interest products. That was over the duration of, I want to say three to four months at a multitude of different banking institutions. And I have to reiterate that the patience of the client is really what’s going to be the most beneficial factor in that scenario.

Dylan Silver (14:24)
Now you mentioned several additional ⁓ products, or I I believe at least one other in a business line of credit. So break this down for us, the offerings that folks can ⁓ come to you for if they’re looking for help and assistance with access to credit.

Shawn Chambers (14:40)
So as of right now, we work in three main sectors. We focus on traditional lending, which would be your traditional SBA loans, business lines of credit, business loans, 0% interest business credit cards. Then we have our alternative lending departments, which focuses on alternative revenue-based lending, such as MCA loans and MCA lines of credit, right? And then we have our hard money division, which

We’re establishing relationships with different hard money lenders across America, different DSCR lenders, debt funds, private lenders, and agency lenders in order to facilitate any type of deal that a client would come to us with. We’re actually in the process of brokering a 50-unit commercial property in Houston, Texas, as we speak, hoping to actually obtain financing on that within the next one to two weeks. This multifamily property was.

Previously being utilized as a motel, hotel motel. It’s been reconfigured into a traditional multifamily property, hoping to close off that deal sometime soon. And, you know, down to your grassroots real estate investor who is currently investing in a new construction project of her own in South Carolina, looking to build her second three-bedroom, two and a half bath house. ⁓ we work with clients of all means through all three of these different channels.

in order to help them achieve the right ⁓ goal that they’re looking for.

Dylan Silver (16:47)
Now, for folks who are already at a size and scale of their business where they’re managing, let’s say, multiple sites, you know, contractors, subcontractors, they’re doing acquisitions and they’re trying to determine, you know, what are the next steps for them? Is credit stacking right for that person? And and also too, you know, what are some things that maybe they have to consider before looking at credit stacking?

Shawn Chambers (17:12)
So before looking at applying for funding is what I’ll break down your question into, right? Before applying for funding, you need to look at a couple of things, such as what your current liquidity is, what your current risk tolerance is, and you know what you’re what you’re looking to invest in, right? So if you’re looking to make an investment that is, if you’re investing more into a situation than what you’re looking to profit back from it, ⁓ I would consider that you take a second look at your numbers, right?

Other than that, it’s really just a question of are you really committed to achieving the results that you’ve set for yourself? Because the the capability of accessing the funding is always going to be there. The knowledge of how to access it and access it at a level that it can be beneficial to you is easily obtainable. The question is just going to be whether you’re going to, you know, follow a plan, set a plan, follow the plan, execute on the plan, and you know, follow that path to the end of the road.

Dylan Silver (18:08)
Is there a mistake that you see commonly make either when applying or when they’re approaching how they acquire debt in general?

Shawn Chambers (18:19)
So a common mistake that we see most people make when applying for funding is going to be not applying in the right sequence or applying blindly, for lack of better words. So what we do and where the benefit of working with a company like ours comes in at is the relationships and the knowledge that we’ve cultivated over the time that we’ve been operating. So we are plugged in with different banking relationship managers. We have connections at

Different institutions that allow us a little bit more insight into their underwriting guidelines and their lending box. So you may be applying for funding at a bank that doesn’t like to fund the type of deal that you’re dealing with. I was actually on a call with a BRM from Fifth Third Bank earlier today, and they informed me that, I apologize, it was actually Citizens Bank. And ⁓ they informed me that they actually don’t like lending on.

Commercial properties, ⁓ industrial properties, something things of that nature that fit a certain asset classification, right? Now, when it comes to obtaining credit on a personal level, they have high-risk industries, red flags that they see on applications that you need to be aware of, whether your NACE code matches up with an industry that they prefer to lend to. ⁓ there are multiple things that can just be obtained by having the foresight and knowledge.

before applying for funding that a lot of your typical investors and clients aren’t necessarily privy to.

Dylan Silver (19:46)
You mentioned something I believe it was a NYX code, if I’m not butchering that. Can you break that down for us?

Shawn Chambers (19:51)
Yeah, so your next code is going to be a government identifier that basically classifies your industry. So my business typically being classified as business consulting, I believe we fall under 511611. Now, when you input that number on when you apply for a business checking account, right, you’re going to be classified under that number as a business consulting company.

Now, a business consulting company to certain banks may be high risk where they feel that their exposure they’re willing to allow you on their lending products should be lowered. All right. So let’s say that everybody’s familiar with trucking companies and they’re familiar with the risk that comes with operating a trucking company. So if you were to have the same financial, same credit score, same credit profile with a trucking company operator as somebody that operates a business consulting agency.

A trucking operator could possibly be approved for a $20,000 line of credit, while a business consultant could possibly be approved for a $50,000 line of credit, right? It all comes down to that bank and what they perceive as high risk and who they prefer to lend.

Dylan Silver (21:02)
We are actually coming up on time here, Shawn. Any new projects that you’re working on? And then also anything you’d like to mention directly to our audience.

Shawn Chambers (21:09)
⁓ no. So as of right now, as I stated, we are building out our hard money sector. I appreciate you, Dylan, for giving me the opportunity to plug my company, plug my services, and educate the masses a little bit more on exactly how we can assist them in facilitating any type of funding needs that they have. If you’re interested in learning more about funding, learning more about personal credit, financial literacy, you can follow me on social media @capitalelevation

My Instagram is personally branded at no cap credit. ⁓ also you can visit our website, which is capital-elevation.com

Dylan Silver (21:48)
Shawn, thank you so much for joining us today. Thanks for your time.

Shawn Chambers (21:51)
All right. I appreciate you too, Dylan. ⁓ thank you for your time and I look forward to speaking with you again.