Chapter 13

1 Reply

Due to changing circumstances that I (should have but) didn't plan for, I have had to file Chapter 13 to keep my house.  The move has put me in a much more stable place financially but of course my credit score will take a hit for the duration. 

I would be interested to hear from anyone who has dealt with a similar situation and still moved forward with investing in real estate.

My current plan is to rent out the two empty rooms in my house while I do the rehab work to the rest of the house. By the end of the year, I'd like to have the whole house ready to rent (still continuing to rent the individual rooms) and make my next move, preferably to a multifamily (four-plex would be ideal) and repeat the process on that scale.

What kind of challenges should I expect along the way?

This sounds like you may have some issues that you are not thinking of.  Subletting is not always allowed.  Local ordinances will govern such things.  Further, subletting while the house is under construction may present another barrier since portions of the house would be void of use and bar some level of occupancy.  Remember, when you sublet you step into the shoes of a landlord thus have responsibilities to the same and limitations on certain remedies.  

I would start with local ordinances on subletting and understanding if the construction you plan on doing jeopardizes the property's capacity for occupancy in a rental situation.  

As far as the BK13 goes, you will be able to borrower once your BK plan is discharged in 2 or 3 years from that date.  You can obtain unsecured credit sooner after discharge which will help build credit for a possible mortgage date once the milestone has been reached.  Ultimately the sublet idea is more concerning than your BK13 here.  Good Luck.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you