Frequently Asked Questions

LLC

What's An LLC?

LLC means “Limited Liability Company”. An LLC is a corporate structure in the United States for which the owners are not personally liable for the debts or responsibilities of the company. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a sole proprietorship or company.

When is the best time to get an LLC?

Assuming you already have both: a) good personal credit (in this case, a FICO of 700 or more) and b) existing properties that you are already renting, the best answer would be: as soon as possible (since you don’t want to delay the benefit of building business credit).

In fact, there are investors who open several LLCs at the same time in the state where they plan to have the properties. That way, they can start building business credit right away and have LLCs available by the time they close on a mortgage.

Otherwise, you will have to factor in the time it takes to get an LLC created (between 2-4 weeks depending on the state).

If you do not have properties yet, then it is better that you wait until week 4 of the Real Estate Nova program to do everything right from the beginning.

Once you have understood everything in week 4, you can apply the strategy of opening several LLCs in the state where you plan to invest and have them “parked”, ready to be used.

What is the best state to open an LLC? (additional details in week 4 of the program)

Nevada or Wyoming for your Holding LLC (details in week 4). For each property, you plan to buy: in the state where the property is located.

How long should I wait before applying for business credit after opening an LLC?

The very first thing you should do after opening an LLC is to open a business checking account (that takes precedence over business credit). Once that is done, and assuming you have good personal credit (a FICO of 700 or more), you can apply for business credit after 6-9 months of having established your LLC.

I’m closing on a mortgage with the bank, can I close the mortgage under an LLC?

NO – if you are using a residential mortgage. Residential banks are only allowed to close mortgages with individuals and not with companies. These rules are dictated by financial regulatory entities (example: the Federal Reserve, the FDIC, etc.)

YES – if you are using a commercial mortgage (since they are governed by different regulatory rules). To learn more about mortgage types, go to your lessons from week 1 of the Real Estate Nova program.

Why wouldn’t a bank let me close my mortgage under an LLC?

Residential banks are only allowed to close mortgages with individuals and not with companies. These rules are dictated by financial regulatory entities (for example: the Federal Reserve, the FDIC, etc.)

I closed a property under my name, how do I transfer the title to an LLC?

The details of this question are covered in week 4 of the program. If it is possible to wait, hold on to see the class. If not possible, you can contact a real estate attorney who will help you with the transfer of ownership. Before making the transfer, consider opening an LLC with an accountant or the same real estate lawyer.

Once the LLC is ready, the real estate attorney will have to review your mortgage documents to review the clauses before transferring your name to the LLC.

I bought a house cash, how do I transfer the title to an LLC?

The process is the same as the one in the question “I closed a property under my name, how do I transfer the title to an LLC?”

I have a property with an FHA loan, can I transfer the tittle to an LLC?

Properties with FHA loans have more stringent regulations as they are backed by the government. The best thing you can do is take the mortgage documents to a real estate attorney to read them correctly and understand the clauses. If there are no clauses that prevent you from transfering title to an LLC, the attorney will guide you through next steps. And if you can’t, the attorney will inform you accordingly.

Can I open an LLC if I only have an ITIN?

Yes, more details of this can be found in week 4. In order to create the LLC with an ITIN you will need the help of an accountant or CPA (which stands for Certified Public Accountant)

Credit & seasoning of funds

What’s the difference between the Vantage and the FICO score?

Click here to see image/breakdown (https://drive.google.com/file/d/1V5w9AVb_Gu9gIBaPAUrU8Ss1Dc0kT61c/view?usp=sharing)

How can I get money out of my credit cards?

Through services such as:

Watch this video for more info: https://youtu.be/eOx82LBo14g

What do I do with the cash I get out of the credit cards? If I use credit cards, wouldn’t that impact me negatively when it comes to applying for mortgages?

Your credit card usage will not be an impediment to take out a mortgage as long as you stay below 30% of the use of your total credit line. For more detail, refer back to your classes in week 1. When you take out the money, you will have to let it “season” (that is, leave it in your bank account for at least 3 months without moving that money). So if you plan to buy, start making money from your credit cards at least 3 months in advance.

How do I handle the minimum payment of my credit card after taking of that cash out?

That is determined by your credit profile. To get the estimate of your minimum payment, simply call your bank or look at your credit card statement and look for where it says “APR”.

That APR will be your interest rate after your introductory offer of 0% is over.

Let’s make an example of numbers: -Debt: $ 5200 -APR = 24% -That means that = $5200 × 24% will give you $1248. That $ 1248 you will divide by 12 (since they are 12 months a year).

The resulting number will be the estimate of your minimum payment, in this case $ 104 per month. When you know that, you will leave $3,952 (the result of $ 5200 – $1248) in your account without touching for at least 3 (to do the “seasoning”) and then use them to invest.

The other $1248 will be set aside so that you can continue fulfilling your card payment obligations. NEVER STOP PAYING YOUR CREDIT CARD AND ALWAYS PAY IT ON TIME.

Why is my credit score in Credit Karma moving up and down so drastically (like a roller coaster)?

The Credit Karma algorithm is designed to help you monitor your credit profile, that is, to help the user to be aware of any activity that is out of the ordinary. Therefore, updates occur very often. To stay on top of the score every day is something that will not help your mental health.

Use Credit Karma only to monitor the activities, for example: if you see on the record a new credit card, check to see if that information correct. If it is, nothing happens. But if it isn’t, call the bank as soon as possible and report that fraud to Equifax, Experian, and TransUnion because there is a high chance that your credit was run without your authorization or that your identity was simply stolen.

Are there other ways to check my credit?

Yes, you can use the applications from your credit cards. Another option is by following the instructions of the classes of week 1. You can also watch this video: https://youtu.be/8jcb-0mbdH8

Which credit cards do you recommend?

Link to our recommended credit cards: https://www.novariseinvest.com/best-credit-cards/

Check this video for more information: https://youtu.be/2qbMeJiax5U

I have a FICO of 600, will I be approved for a mortgage?

Yes, there is a possibility. Details are in the classes of week 1.

How can I build credit with an ITIN?

Please refer to this video: https://youtu.be/JUTJqizg8e8

How can I improve my credit, almost instantly?

Refer to week 4 for details. If you haven’t gotten that far into the program yet, feel free to watch this video instead: https://youtu.be/ndAGS7Ubjn0

When is the best time to request a credit line increase?

This question is answered in detail in the bonus section of the program. But if you need to do it now, the best time is when your cards are below 30% utilization.

Fund & Grow

Can someone use Fund & Grow if they only have an Individual Taxpayer Identification Number (ITIN)?

No, you must have a Social Security number.

Can I bring a partner?

Yes, each membership allows 1 additional partner to join for FREE.

Is there a discount for Novarise students?

Yes, you will get a $500 discount, but only if you use our Novarise link.

What are the requirements to join Fund & Grow?

Besides having a Social Security number, having a strong credit profile may provide you a better chance to obtain higher limits with better interest’s rates. However, it is best that you get on a call with Fund & Grow to have a specialist assess your case since we all come from different financial backgrounds. You can schedule that call with F&G Fund & Grow

Why did my personal credit score drop after applying for business credit?

When you apply for a new business credit card, it typically shows up on your credit reports as a hard inquiry. Several inquiries could temporarily lower your credit. The good news is that F&G will work with you to raise that credit score again.

Why are the limits on my new business credit cards low?

There could be several factors affecting your limits. An example could be you not having a long personal credit history or you currently having low personal credit card limits, etc. However, throughout your membership with Fund & Grow, their representatives will continue to work on your behalf to increase these limits and obtain new business credit cards.

Mortgages

Why was my mortgage denied in one bank but not in another?

One of the reasons is because each bank has a monthly quota to meet. For example, if a bank has a maximum capacity to approve 100 mortgages per month, and you are application #101, that is an automatic rejection.

But if you go to another bank, they may have the same capacity of 100 mortgages, but you turn out to be application #80. In that case, you are likely to be approved. Other reasons may be the following mentioned in this video: https://youtu.be/cWvZ3XzTWyU

If I use the credit cards for the down payment, wouldn’t that have a negative impact on the mortgage application?

If you are using business credit cards, then it should not impact you in a negative way. But if you decide to use personal credit cards, make sure that the total credit card utilization stays under 30% (refer to week 1 for more details)

What can I expect after asking the bank to remove my escrow? Who do I pay insurance and taxes to?

The process would be approximately the following (remember that each bank is different):

1. You make a request to close your ESCROW account. The bank will send you a check with the funds they have set aside for ESCROW to date. You will deposit that check in the bank account that you use to pay your mortgage. Once the money is available in your account, you can use that money towards the principal of the mortgage.

2. When it’s time to renew your home insurance (done annually), the insurance agency will first contact the bank for payments. And if the bank does not respond (and they will not because the ESCROW account will be closed by then), the insurance agency will end up contacting you. When the agency contacts you, you can make the insurance payment with the 0APR card.

3. The same process happens with property taxes, the city/county/municipality will contact the bank first. If the bank does not respond, the city/county/municipality will contact you. When they do, you pay your taxes using the medium that works best for you.

Taxes

When should I file my taxes?

Here is a link to a site for federal tax filing deadlines: https://www.thebalance.com/income-tax-deadlines-3192862

How do I pay for my taxes?

The most effective way is to pay them electronically at IRS approved sites. Your accountant will have that information available when it is time to declare.

What’s a 1031 exchange?

That strategy is covered in detail during week 3 of the program. But in summary, the government allows you to defer paying taxes on the gain from the sale of your properties. To qualify, the government will give you 6 months to find and close on a property of equal or more value than the one you sold (hence why you hear that the rich get richer).

In the meantime, you can watch this: https://youtu.be/N5jqmyso7a8

Can I deduct the cost of the Real Estate Nova course on my taxes?

Yes, as long as you take the deduction in the year you purchased the course. For example, if the course was purchased in 2020, the deduction needs to be taken on your 2020 tax return.

Depending on the accountant, you will need to provide copies of receipts and/or the EIN number.

Copies of the receipts have been sent directly to the email you used to purchase the course.

To obtain the EIN of our company or additional instructions on how to deduct the cost of the course in your taxes, please send an email to the following address: [email protected].

International Investors

I bought my house under someone else’s name because I didn’t qualify for the mortgage, how do I add my name to the title?

The answer to this question is in week 4. If you need help right away, the best thing you can do is to contact a real estate attorney to help you or add your name to the title, or transfer the title from the other person onto your name.

How can I build credit with an ITIN?

Please refer to this video: https://youtu.be/JUTJqizg8e8

I’m being asked to provide a mailing address, what if I don’t have one in the US because I reside overseas?

The answer to this question is in week 4. In the meantime, you can visit UPS to check out postal mailbox services.