Posted on: January 12, 2022
WI 861 | Using Credit


As a real estate investor, you’re going to spend money. Numerous expenses come with investing in real estate. And, simply put, if you are not using credit cards for your real estate projects, you are leaving money on the table. But credit cards have their downside too.

So, as long as you’re learning how to invest money, you might as well make the most of it. And today, we will be sitting down with Brent Bowers as he teaches us how to leverage credit to build up our wholesaling careers!

Is Using Credit To Buy Real Estate A Big Mistake Or A Brilliant Strategy

One thing that is like oxygen to business is money. In this episode, I’m going to teach you how to leverage credit to build your real estate business and buy real estate. I’m going to give you multiple steps of how to leverage other people’s money to buy real estate. Ultimately, you are going to consistently rinse and repeat, and do this multiple times. Let’s talk about the first one. That is banks. Everyone has heard about banks. You can go in, talk to your banker and tell them, “This is the project I’m looking at. I’m getting it at a discount. It’s worth $100,000. I’m buying it at $65,000.”

Generally, banks like to see a lower loan-to-value, somewhere less than 75% loan-to-value. What does that mean? If the land or house is worth $100,000 and you are getting it for less than $75,000, you are below that 75% loan-to-value ratio because you can get a loan for $75,000. That is the top. Next is local credit unions. Local credit unions are sometimes easier to work with than big banks. The big banks would be considered like Chase, Wells Fargo or Bank of America. Local credit unions would be Fort Pierce Credit Union or Ent Credit Union.

They oftentimes will have a little bit more leniency. You can get to the actual banker. A lot of times, credit unions are member-owned. They want to see you succeed and put the money back into your business. That way, they are building the actual community. That leads me to the small community banks like the Marine Bank & Trust, Fort Pierce Community Bank or things like that. That’s an example of community banks. These are generally smaller. They are locally owned and funded by people that live in that community. When the community grows, the bank will also grow.

These are usually the easiest banks to get loans from to buy real estate and leverage debt and money to buy real estate. When you are leveraging credit, debt or money to buy real estate, it’s all about your credit score. You don’t want to have a lot of credit out. You want to make sure if you have a credit card that you’ve got a $5,000 limit. You never want to go past that $2,500 amount. That is over 50% of what you’ve got available on that credit card. You don’t want to leave a balance. It looks good to see when a bank, a credit union or a community bank is checking your credit.

WI 861 | Using Credit

Using Credit: If you make $5,000 a month and spend $2,500 a month, that’s half of your income. So you are at a 50% DTI. Lenders love seeing people below 40%.


They want to see that your debt-to-income is very low and you are responsible for the utilization of credit. How do you look responsible? If you’ve got a $5,000 credit card and $4,999 on that card, and you are paying the minimum payment each month, that does not look responsible whatsoever. Let’s have another scenario. You’ve got a $5,000 credit card. You put $2,500 on there and pay that $2,500 off over 3 or 4 months. You have a zero balance and you’ve got funds available of $5,000. You now look like a responsible person that utilizes your credit in a responsible way. This is what banks like to see.

A lot of times, banks and lenders want to see you less than 50% of your debt-to-income. What does debt-to-income mean? If you make $5,000 a month and spend $5,000 a month, you are at a 100% DTI. That’s debt-to-income. Let’s say you make $5,000 a month and spend $2,500 a month. That’s half of your income. You are at a 50% DTI. Lenders love seeing people below 40%. Next, let’s talk about VA loans, FHA loans, and conventional loans. I love VA loans. That’s Veterans Affairs loans. You might say, “I’m not a veteran. I can’t use it.” You might know a veteran who could use it.

VA loans are 0% downloads. If I go and buy a house that’s worth $100,000, I can get a $100,000 loan from the VA but I would have had to serve in some type of military capacity. There’s FHA. The Federal Housing Administration runs this. They Federally back these loans and ensure these loans for lenders to be able to give these loans out. Usually, you only have to come up with about 3%. If you are buying a $100,000 home or a $100,000 loan, you are only coming up with $3,000 towards closing costs, down payment, and things like that.

There are conventional loans. Usually, in conventional, you have to come up with a little bit more like 10% or sometimes even 15% to 25% if it’s an investment property. Conventional loans are a little cheaper and a little less expensive. Origination fees and points are less. Points and origination fees are alike items. They are the same thing. What is an origination fee? For instance, if I’m going to give you a $100,000 loan, I’m going to charge you 3.0 points or a 3% origination fee. You are going to pay $3,000 for that $100,000. That is the front-end cost.

One thing that is like oxygen to business is money.

That’s the best easiest way to explain what points or origination fee is. Conventional loans don’t have as high a points or origination fee because you are coming out with more out of your pocket. You can even sometimes get a lower interest rate but FHA and VA loans are usually easier to get. There are lower credit standards and less money out of your pocket. VA is the easiest loan to get if you are a veteran. They are a little bit more expensive and pricier than a conventional loan.

Next, let’s talk about hard money loans or private money loans. They can be used hand in hand. When we say hard money, usually it’s harder to get but it’s not harder to get. It’s easier to get but you pay harder interest. What do I mean by that? For example, my first hard money loan was 4.0 points and 12% interest per annum. None of that interest payment went towards principal paydown. For example, I’ve got a $100,000 loan and paid 4.0 points, so I had to come up with $4,000 or 4%. A percent is a point. It’s the same thing. I had to come up with $4,000 to buy that house at that closing 4.0 points.

I paid 12% on $100,000. You divide that up by the monthly payment. That’s what I was paying towards interest each month. I had six months to pay it off. I had to sell this house in six months. That’s a hard money loan. A private money loan is usually from friends, family, your neighbor or someone who’s got a self-directed IRA. These are generally lower interest like 8%, 7%, 6%, or sometimes 9% interest. There are no points. There’s no origination fee. There’s no coming to the table with $4,000. Private money is usually a lot less expensive.

I want to give you a lender that helps you buy land, houses or any real estate. They try and stay on the residential side. For commercial, they are not too much into that but they will help you with buying land and building a house on it. I want to give you this link. It’s my friends over at Cogo Capital. It’s the This is going to be one of the easiest loans for you to get. They base it on the asset. It’s a hybrid of hard money and private money but allows you to get started quickly in real estate.

WI 861 | Using Credit

Using Credit: When you’re leveraging credit to buy real estate, it’s all about your credit score. You don’t want to have a lot of credit out.


I was talking to a friend the other day. His name is Craig. I was talking to Craig about how to get started in buying land or leveraging debt, credit, and other people’s money in real estate. He has been with the school board for a while. I was talking to him about how other teachers have savings accounts of $50,000, $5,000, $10,000, $20,000 or $100,000 sitting in their savings account and earning them 0% interest. I brought the fact to him like, “Craig, what if you borrowed $5,000 from one of your teacher friends that are doing nothing with it, it’s sitting in a savings account and earning them nothing, and paid them 5% or 6% interest on that $5,000?”

“You found a piece of land worth $20,000 that the seller is willing to take a discount on because they are motivated to sell it. You are going to pay the seller $5,000 for his $20,000 parcel of land. You are paying $5,000 for $20,000 and getting this land at a value of $0.25 on the dollar. You are getting a massive discount on this land. You are going to pay your teacher friend 6% interest on this $5,000 and set up a time to where you pay him back in 1 or 2 years. You are going to go out and find a buyer that’s willing to pay what this land is worth $20,000 and charge that buyer 9% interest.”

Let’s call him Mark. Craig is paying Mark 6% for that $5,000. Your buyer, Betty, bought the land for $20,000 and she’s paying 9% interest. You get Betty to give you a $1,000 down payment and a couple of hundred dollars a month. How many times can you do a land deal with other people’s money if you are borrowing $5,000 at 6% interest and selling land for $20,000 at 9% interest? The arbitrage is crazy. You go out and talk to other people.

Maybe Jim has been school teaching for years and he’s got $50,000 he wants to put in on the deal or the next deal. You can do more real estate transactions than you ever believed and imagined possible by leveraging other people’s money and leveraging debt with private lenders or friends of yours. We all have a warm environment. For example, Craig’s warm environment or sphere has been the school board and schoolteachers. He knows other schoolteachers. He can talk their languages. You might be a doctor or an attorney. You can talk their languages. Utilize this.

You can do more real estate transactions than you ever believed possible by leveraging other people’s money.

This is one way to leverage other people’s money, credit, and debt to buy more real estate. This last point, you are going to love very much. This is exactly how I started my land business. I have done over 280-something land deals. Let me talk to you about another method of using your buyer’s funds to purchase land. For instance, I found a piece of land that was for sale for $500. The land was only worth about $5,000 or so because there were some issues with it. It wasn’t accessible. You had to trespass against State land to get to it. What I did was set it up with my seller.

She was going to sell me the land at $500 but beforehand, I had her sign a purchase agreement that she was allowing me to buy the land for $500 but also allowing me to pre-market that land to buy a seller because that’s the biggest thing people are always concerned of, “What if I get stuck with this land? What if I can’t find a buyer? What if it’s not worth $5,000?” What I did is put it on Craigslist and advertised that land for $5,000 for sale. Mind you, I’m buying it for $500, I would allow or offer seller financing at $500 down and $400 a month for a total purchase price of $5,000.

I had a buyer the next day. I went and purchased this land and wrote the seller a check for $500. The next day, I’ve got $500 cash from my buyer. I’ve got my money out of the deal. I now no longer had any risk on this deal. The following month, I’ve got $400 cash. I continued, rinsed, and repeated. I can buy it. For instance, we are buying a city lot in Colorado Springs. We are paying $16,000 for this lot. It’s worth about $35,000. I’ve got it under contract, sent that contract or purchase agreement to the title company, and advertised for a buyer to come and bring me $16,000 down, and then $500 a month for however many months until they pay that $35,000 off at 9%.

Run that by a mortgage calculator. I’m not giving you the exact details of that. All I’m trying to say is I used my buyer’s funds to purchase that land. The title company closed it and now I’m the bank. I hold the Deed of Trust and the promissory note for this parcel of land. I didn’t have to come up with funds, borrow money from a bank, use my credit and leverage a bank’s money but I leveraged my buyer’s money. They came to the table with $16,000. Learn from my little mistake. One thing that I forgot is I should have gotten a little bit more funds or money from my buyer, not $16,000 but about $17,000 because then they would have covered the back taxes, closing costs, and all that.

I did have to bring about $1,000 to $1,200 to the table to cover the closing costs and the back taxes. It allowed me to do a land deal. I didn’t have to come up with $16,000. I only came up with $1,200. Put that in your tool bag and use it. If you are interested in getting started on your way to generating passive income through the land, head over to and schedule a call with me. We will hop on a short call together and discuss your real estate investing goals. If it sounds like we are a great fit, I would be honored to help you on your land investing journey. I will see you next time, land sharks.

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About Brent Bowers

Brent Bowers, is an investor and coach with a focus on buying and selling vacant land. As an Army Officer with over 8 years of service, Brent was spending a great deal of time away from his family, and he knew he needed to make some changes in order to be more present with his wife and children. In a short period of time, Brent was able to expand his business, hire a team, and (most importantly) spend quality time with his family while still working hard and helping others. While Brent invests in many different types of real estate, his favorite investment strategy deals with buying and selling vacant land, and he enjoys sharing his expertise in this area with his coaching clients. Brent chooses to live his life based on Bob Burg’s quote, “Your influence is determined by how abundantly you place other people’s interests first.” He is passionate about helping other people find success in real estate investing, particularly in land investments

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