Getting started, have cash and bad credit

8 Replies

I have been reading this site for a few months now. Due to a lawsuit I will be coming into about 800-840k. I want to make sure that I don't blow the money and I'm trying to get into real estate investment. I filed bankruptcy 18 months ago so I know lenders will either deny or give me high interest loans. I'm currently in the Army out in Colorado Springs, colorado. What advice would all of you give for a person in my situation?

@Shaun Kackert  - Welcome to BP!  You can buy the houses in cash, then pull the money out in a few years when your credit is better.  Or if you want a loan I have included some information below.

FHA Loans and VA Loans

To obtain an FHA loan or a VA loan after a Chapter 7 bankruptcy, you must wait two years from the date your Chapter 7 is discharged. You can obtain an FHA loan during a Chapter 13 bankruptcy as long as you have made 12 months of satisfactory Chapter 13 plan payments, but you must have bankruptcy court approval to get the loan. In the case of either an FHA loan or a VA loan, you must provide an explanation of the bankruptcy.

Conventional Loans

Conventional loans have the longest waiting periods. If you want a conventional loan, you must wait four years after receiving a Chapter 7 discharge and two years after receiving a Chapter 13 discharge. If your Chapter 13 case was dismissed without a discharge, you must wait four years from the date of the dismissal.

Meeting Other Loan Criteria

Once these time periods pass, you will then be able to qualify for a mortgage loan -- but you must still meet all the typical qualifications for obtaining a mortgage loan. You must be creditworthy, and you must be able to prove that you have a sufficient and reliable source of income. To learn more about rebuilding your credit after bankruptcy, see our Your Credit & Bankruptcyarea.

shaun. here is an idea. use a portion of that 800 to 840 k to secure the loan. put the amount you want to borrow in an account at the bank you want to finance the mortgage through. put the funds up for collateral. if the bank asks why you don't just pay cash, your simple answer is that you wish to rebuild your credit and you want to keep your money safe and secure. you will not have access to this money set aside as it is collateral, but you still own it. in doing this, you can rebuild your credit thru making your payments on time and refinance when your credit situation is better, then freeing up the money you have set aside as collateral. 

@Shaun Kackert

You could make private loans to other investors and make the same ROI in a much safer situation then owning property.

You could either just pay all cash or use private financing as your most likely not going to get any bank loans for some time. 

Good luck

Find deals that offer seller financing. All they care about is cash. 

If you plan on doing active rehabs then finding hard money should be easy

You can also find a local bank that may refinance your property after you pay it all cash

Seller financing and hard money will be the best bet- you will be able to to get that with roughly 20 to 25% down in most cases- sometimes less.  try not to tie it all up in one deal and if I can suggest- go for multifamily or commercial- 

LC Chase

916 532 5419

Wow, great advice.  @Brie Schmidt is my favorite. Being in the military, you can't go wrong with a VA loan. Essentially, zero down...though having to wait may hurt a bit...

Wow, with that kind of a payoff, you could definitely be the bank for some investors. You could finance some decent flips over the next few months, make a decent return, fix your credit, and be ready to get into some bigger commercial investing by the time your credit has had some time to recover. What I wouldn't do is make an all cash purchase on a buy and hold property, as your ROI is nill. Flips, however, are a better opportunity for you. No one cares about your credit if your financing it yourself.


Are you looking to be in the residential or commercial market?  What are you looking to spend?  I think you could potentially get a commercial loan as I know of programs that would work with your credit issues.


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