WCAP Financial Services -- can I trust them?

33 Replies

I just off my second call with WCAP Financial Services.

Long story short, the salesman become combative when I questioned their sources of funding. I requested multiple times to get an explanations and clarity of services, which were countered with, "Don't you want funding?"

While I'm still interested in getting more funding, I have a feeling that a service that is solely based on signing me up for credit cards is probably not worth trusting.

Has anyone else had better luck with such services?

@Nate Smoyer I am sorry you had that experience.

WCAP is a joint venture with Seed Capital. You may want to go directly to Seed Capital. I have been to their HQ in Las Vegas. They are legit and helped a lot of people get funding. I think you just landing on a desperate sales person at WCAP.

The summary of their program is they help you get personal and business credit and get the maximum amount for which you can get approved. They offer a guarantee that you get your money back if they are not able to get you at least $50k, which I believe is unique for most firms like them.

How they are able to do this is that they have a database of thousands of applications to hundreds of banks so they know what will get approved and what will not get approved from a credit, income and other factors perspective. 

Feel free to DM me if you have any specific questions for me.

The short answer is NO.  Unfortunately they don't guarantee any rates or time frames for the cards.  This means that if they get you credit at 24.9% its the same as 0% to them.  Furthermore the disconnect between WCAP, the marketing company, and SEED, the consultants, makes it difficult to get a resolution from either company because each blames the other.

Happened to me.  Don't let it happen to you.

Ryan - I am sorry to hear that about your experience. 

Either way, if the credit is 24.9% or 0% it is part of strategy, the strategy of using credit cards and lines of credit to pay for renovations or buy property. This strategy in general has its risks just like hard money lending. WCAP's goal is to help you get access to credit. How much credit you get and what the interest rate is based on your specific credit and the banks you work with. They are just a company that helps.

Some of you capital will always be more expensive than other capital. An FHA loan is always going to be cheaper than a low doc loan and that is going to be cheaper than hard money. @Nate Smoyer You need to figure out what is best for your specific situation.

I would be happy to jump on a call with you to talk you through what you can for your specific financing situation. Send me a DM and I can give you my contact information

Hey @David G. , thanks for taking the time to reply. Do you work for WCAP? Either way, happy to jump on a call (will dm info).

There definitely seems to be some disconnects of what you know about them and what was communicated to me.

  1. $50K is not guaranteed. The sales rep even mentioned he was going through the program, but only qualified for $30-40K.
  2. I didn't hear anything specific on the fees they charge, despite me asking multiple times. I couldn't even get a range--which tells me there's something to hide. Even an average fee per scenario would have been very helpful.
  3. The sales rep wouldn't confirm or deny all of the funding comes through credit cards. He kept countering my questions with, "Look, you want funding, right?"

Definitely would much rather go FHA, but always interested in exploring alternative options for out of the ordinary scenarios. Thanks for sharing what you know about the service.

@Nate Smoyer I do not work for WCAP. However, I have had the opportunity to visit their office in Las Vegas and know the one of the owners. A friend of mine in California used to work for them. So, I have a bit of an inside connection.

For you specific questions here is what I know:

1. Everything depends on your specific credit situation. If you do not have the required credit for the $50k program they cannot provide the guarantee. They do not directly provide the funding. The funding is provided through banks and credit card companies that they guide you through the process.

2. In terms of fees it is $3,500 for the initial program and $3,000 for the follow on fee if you want help after the initial program to get more credit or to use the credit cards for more than just charges (e.g. balance transfers).

3. It is almost exclusively credit cards.

Sorry to hear that it sounds like you may have not spoken with the best sales person. I am happy to talk through your specific situation and answer anything in more detail to the best of my ability. I should have accepted your connection request.

@David G.   I wanted to know if you had any insight on using something like this company on a flip that you just want dump a few thousand into for paint and repairs. I really want to make sure that I don't attach more debt to my primary residence if I'm making repairs to a non income producing asset that I plan of getting rid of.   It seems that with something like these guys you are not on the hook for the debt if it is not attached to a property. Is that true or am I over thinking this?  Thanks.

@Derrick Thomas A credit card strategy could work for you. However, if you have access, you may be better off using cash or a HELOC if you just need a few thousand dollars for paint and repairs. There is also the option of using a FHA 203K mortgage if you can live in the property for a year.

@David G. Thanks for the suggestion. It seems like for paint and small repairs I would be best off to just use cash. I am usually able to save a few thou from my medical hustle each month, so I should be able to reinvest it. Good thing I don't have to go the PML like Aaron.

Does anyone have any experience with doing painting and minor repairs themselves? Is it worth it vs. hiring someone? Can tenants notice the difference?

@Derrick Thomas for painting I have done one or two rooms by myself or with a friend. However, it is better to hire a professional, you can see the difference, especially if you one day want to sell the property to a homeowner. 

If you are going to do it yourself try to find a helper that has some experience.

Last, one place I recently had luck with finding a painter for a small job was on Task Rabbit. I found someone to paint and repair the plaster in a closet for a great price. He was a retired union carpenter.

@Amber Castro I would think a financial advisor would be a good place to get you started. You may in fact want to find a partner for your investment, someone who has gone through the process before and will be knowledgeable with how you can get the most out of your laundromat. If you are seeking knowledge or a partner, you have come to the right place! Biggerpockets is full of people who can help you. I will send you a connection request, let us keep the conversation going!

@David G. I couldn't agree more that it is better to hire a professional when you are not well versed in handyjobs yourself. The end product is a completely different animal. I haven't tried Task Rabbit, are they for any types of jobs, or just home construction tasks?

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For Travis and all other with similar interest- try BuildZoom. Just take the time to vet whoever you may hire. BuildZoom uses a rating process based on criteria's like experience, verified licenses or insurances, and even comments people make about you. Their service will forward you three top tier referrals but just because they will be rated high up in BuildZooms' program dose not mean they are top tier contractors. But the people at BuildZoom seem to go out of their way to get you what you are looking for, so expect follow up calls and emails, until you close out the request. Good luck to everybody! As for me- I'm a builder for the past 30 years, now starting to do things for myself in central Maryland, so anybody in the area interested in networking give me a shout.

@Bruce Wagner thanks for sharing. I just submitted a bid on BuildZoom for a roof that needs some work from raccoons. When you used BuildZoom, how many quotes did you get from contractors? Also, what type of work did you have them do for you?

I'm trying to vet this source right now myself. I went through their initial process, which involves getting a free credit check and was approved for 40-60k credit line at 0% for a year, with an initial fee of $4500. For flips (or anything) that can be completed during the 0% period it seems like it could be good. My thought -which admittedly may full of holes- goes like this:

So  $4500 is 9% of say 50k. So If I used all of the 50k on a flip, that's like a 9% loan. (4500 is 9% of 50k borrowed)

Once paid back in full the 50k becomes available again and then -theoretically- if fully utilized again that initial 9% loan cost becomes 4.5%. ($4500 is 4.5% of a total of 100k borrowed)

If fully used again becomes 2.25% and so on and the value increases as it's used -in perpetuity.  

 So basically the interest amount on the credit line goes down the more it's used with the value increasing in direct proportion to use of the credit line. Seems great if it's being utilized and there's no hidden costs. If all holds true it seems like a great source of cash on hand.  So my next question would be, what are the other potential costs and pitfalls? How accessible is my credit line? If it's funded from multiple sources do I have multiple credit cards, or is it all in one account managed by wcap? Their sales person said it was a good gap between hard money and total purchase cost + rehab. 

I was thinking about this. On a first deal using hard money at say 15% + $4500 for the credit line fee it might look like this:

 Say I hypothetically if bought a house at 100k and hard money funded 80k.... 

Note: I'm new to both this idea and hard money so feel free to tell me if I'm missing something here.

I'd then be in for 92,000k from the hard money loan + 4500 on the credit line, of which I would use an additional 30k to close the deal and float the rehab. So I'd be all in for 126.5k.  If I sell said property and have say 140k left after closing costs, etc., that's a meager$13,000 profit. Add in $10k of misc "oh $#"  extra costs and that goes down to a measly 3k profit. Seems like a lot of risk and work, accomplishing nothing but making money for others. Maybe that's just an example of a bad deal and says nothing about the value of the credit line. I honestly don't know. I'm just tossing around my thoughts in considering this source.           

  

@Eric Piercey nice job on taking steps to do your first flip. Here are some thoughts about your questions. First some general observations from my experience flipping houses:

1) It is usually a 9 month journey - It is very difficult to finish a flip if major renovation are needed in under 9-months from purchase to closing wire. A lot of people say it can be done, but there are lot of things that get in the way that you cannot control. For example, once you find a buyer it takes as much as 60 days from the point the AOS is signed to get to the closing table with an approved buyer then as much as a day to get the wire in your account. Also, if you need to get permits, the inspection process can delay you as much as a month and in some cities multiple months. All listed above does not even include the actual rehab part, which has its own delays.

2) Taking on a lot of leverage is risk - No matter if you are going to get a HML or work with a company to get you credit. If you are not putting a significant portion of cash down into the deal you are by default leveraged with debt. The risks are that if things go wrong and you don't have reserve capital you could either have bill collectors going after you or the HML company foreclosing on you before you finish the project and all of your money gets tied into the house. This is all the most pessimistic possible view, but be aware that leverage and debt have risks. The benefit of using unsecured credit like WCAP Financial offers to help you get is that they cannot foreclose on your property, a HML can.

Ok now to your specific questions.

1) Are my interest calculations correct based on reuse? - No. 9% per year is 9% per year. You can play tricks on the numbers to say x% per project, but if you are paying 9% in a year then that is what you are paying. However, I do agree the more projects you do per year then you are paying less percent per project. 

2) How accessible is the credit line? - using a company like WCAP Financial, you will be getting access to personal and business credit cards and lines of credit. It is as accessible as the credit cards already in your wallet. There are ways to do cash advances or pull cash out, but they can be complex and you should defer to an expert to help you navigate through the process or you could be faced with big cash advance fees. Lines of Credit are a bit different since you can write checks on them, but the interest starts immediately, so you don't get the benefit of 0%.

3) Are my numbers realistic? - Its hard to say in abstract, best to look at a real deal and run real numbers. Also, keep in mind HML is not just 12% - 15% it also includes points and fees that can be as much as another 3% - 5%. Last, keep in mind the 0% credit card offers only last for a specific period of time.

If you have any additional questions, feel free to send me a DM and I am happy to talk through more of it with you.

I had a bad experience with Seed Capital/WCAP. At first they promised me $70-80,000 in credit. All they wanted me to do was pay down 4 credit cards that were over 45%. I complied and my credit score rose over 50 points. I thought they would be happy. But they tap danced and said I only qualified for $40,000 in credit. At first, their $4,000 fee looked like 5%. As they revised the credit down, it looked like 10%. Then they sent over a Docusign. It said they were only promising $25,000 credit. Now their fee looked like 16%. They are not men of their word. They changed the deal on me 3 times. (And proposed a 4th change, but I was no longer listening or believing.) I'm lucky I found out before I paid them any money.

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