Tom Gazaway has been a pivotal figure in business credit and financing for over 15 years. As the CEO of LenCred, he helps startups, early-stage entrepreneurs, and real estate investors access significant working capital without collateral. Tom’s mission is to empower disenfranchised communities, making him a perfect guest to discuss financial strategies beneficial for both business and society.

The Power of Leverage

Tom emphasizes the strategic use of leverage in real estate. Leveraging borrowed capital can significantly amplify profitability and scalability. Understanding and utilizing leverage correctly can help acquire properties, finance rehabs, and build a profitable portfolio.

“Using other people’s money to navigate through a real estate transaction, whether it’s a rehab or just building a portfolio, is crucial,” Tom explains. “It’s about investing in your future self.”

Building Business Credit

Tom stresses the importance of building business credit rather than solely relying on personal credit. Establishing and growing business credit not only protects personal credit but also opens up more favorable financing options.

“Start with the basics: get an LLC, open a business checking account, and begin building business credit,” Tom advises. “Remember, the right type of financing will often require a personal guarantee, so maintain good personal credit as well.”

Accessing Working Capital

Securing working capital before urgent need arises is vital. Waiting until the last minute limits options and increases costs. By securing lines of credit early, funds are available when opportunities arise without the pressure and expense of last-minute financing.

“Fast financing often means expensive money,” Tom notes. “Having capital ready and waiting allows you to act quickly on opportunities without incurring high costs.”

Conclusion

Tom’s insights provide a roadmap for real estate investors to effectively use leverage and business credit. Planning ahead, maintaining good personal and business credit, and strategically leveraging other people’s money can lead to building a robust and profitable real estate portfolio.

“Treat your credit as an intangible asset,” Tom concludes. “Strengthening this asset over time will help you do more deals, more profitably, and faster.”

For more detailed strategies and insights, listen to the full episode with Tom Gazaway on Infinite Returns: Commercial Real Estate Investing.