No money no credit (bad credit)

8 Replies

How do I start investing into real estate when I don't have cash or good credit? Do I build a business plan and then present it to hard money lender? How does it work? I need a step by step process order and operation strategy?

I believe you aren't ready yet. It's good that you now know what you want to do. It will carry you thru the first steps of your plan. First, pay off your bad debt. Second, save up an emergency fund. Third, start saving funds to use toward real estate. You'll want to skip these steps but don't.

@ Tracie Davis,

Great advise. @ Rowan Woodburn. I bought by first property eight years ago with high hopes and little knowledge.  to make a long story short I was foreclosed on.  The property was a nightmare.  More importantly though I was a financial novice.  There were now, in hindsight so many things I could Have done to improve my end result.

Begin with a full basic understanding of finance.  Get the big picture.  your how's and why's will flow from this.  How I want to invest and why.  A great mission is one of the fundamental reasons people find success in most endeavors.

For instance, I love all aspect of real estate because, I believe this is a highly incentivized field.  Real Estate provides great tax rewards, Shelter from inflation, depreciation, passive income, in addition to being highly leveraged.  I will take real estate over all other asset classes.

These are simply my few of my reasons.  What are yours?  If you are not committed to your mission and have it drive you; one could get lost in the weeds.

Increase your financial IQ.  It sounds to me, that may be your best option now as you are low and funds and credit.  Get your theory down and the mechanics will work itself out. 

Last, if you don't like reading.  Try free audio books on YouTube. Owe, and don't forget to watch all the BP Pod Cast.  

Last, Welcome to BP.  Hope it all works out for you. 

hi rowan. well, lets see. you need to take a first step. all previous answers are good answers. lets first look at why your credit is where it is. fixing a problem means first understanding the problem and how you got there. the first thing you are going to want to do is go on annualcreditreport.com. you can look at all 3 of your credit reports here, on line, in full. you need to see what is in there. even if there is a legit reason for the bad credit, you still could have things on there that are not yours. dispute anything negative. it seems unethical, but dispute ALL things negative. the reason being, the credit reporting agency is required by law to check up on anything you dispute. if the creditor that they contact does not answer back in 30 days, the credit reporting agency is required to remove the negative report from your report. thats right, even if it is correct, if the creditor is legit and the debt is legit, if they do not answer back in 30 days, it gets taken off your report. second, go to a local bank. take $1000 if you can. deposit the $1000 in a savings account. a month later, go take out a personal loan from that bank for $1000, using the savings account as collateral. rust me, they will give it to you because it is secured. take the borrowed $1000 to another bank and deposit it into a savings account. repeat the process several times. then when you get to the last bank and borrow the $1000, use that to pay off the first one and repeat that process. make sure you make all the payments along the way. what you are doing here is establishing credit with several banks. after a while, you will have several banks that will be willing to loan you money without collateral. 

then, check with your local cities on tax foreclosed houses. these are houses that the city and/or county have repossessed from owners because they did not pay their taxes. they sell them at auction and usually pretty damn cheap. i have bought one for $500 once, fixed it and sold it. its a good cheap way to start

Bad credit usually stems from money mismanagement. You have to fix that first or it doesn't matter what you make investing.

There are people who can take 10,000 to 10 million over time with smart investing and financial control. I have also seen people make 300,000 a year and have very little left over and tons of bad debt.

If you talk to a financial analyst they care how much someone makes but more importantly how they USE that income and extended credit over time. Even if you can find a HML for a loan you still want to work on your credit. It will be the foundation for borrowing down the road at great rates.

First look at all your high debt. Credit cards, car payment, house payment etc. Then look at what you spend per month and on what. Cut out all the non-essential items that are a want and not a need. Get rid of the high debt balances first. Start making small investments. You have to turn money going out at high rates struggling to get by into investments that are making you money and growing your net worth.

No legal advice given.

Originally posted by @Mark Elliott :

hi rowan. well, lets see. you need to take a first step. all previous answers are good answers. lets first look at why your credit is where it is. fixing a problem means first understanding the problem and how you got there. the first thing you are going to want to do is go on annualcreditreport.com. you can look at all 3 of your credit reports here, on line, in full. you need to see what is in there. even if there is a legit reason for the bad credit, you still could have things on there that are not yours. dispute anything negative. it seems unethical, but dispute ALL things negative. the reason being, the credit reporting agency is required by law to check up on anything you dispute. if the creditor that they contact does not answer back in 30 days, the credit reporting agency is required to remove the negative report from your report. thats right, even if it is correct, if the creditor is legit and the debt is legit, if they do not answer back in 30 days, it gets taken off your report. second, go to a local bank. take $1000 if you can. deposit the $1000 in a savings account. a month later, go take out a personal loan from that bank for $1000, using the savings account as collateral. rust me, they will give it to you because it is secured. take the borrowed $1000 to another bank and deposit it into a savings account. repeat the process several times. then when you get to the last bank and borrow the $1000, use that to pay off the first one and repeat that process. make sure you make all the payments along the way. what you are doing here is establishing credit with several banks. after a while, you will have several banks that will be willing to loan you money without collateral. 

then, check with your local cities on tax foreclosed houses. these are houses that the city and/or county have repossessed from owners because they did not pay their taxes. they sell them at auction and usually pretty damn cheap. i have bought one for $500 once, fixed it and sold it. its a good cheap way to start

hey rowan. you can do that $1000 deposit as many times as you can. usually it is about 5 or 6 times, depending on how many banks you have in your area. you cannot use the same bank, you have to use different banks. here in buffalo, we have about 10 different banks around so it would be easy to do 5 or 6, maybe by you there aren't as many. the point is to re-establish your credit. the best way to repair credit is of course, pay your bills on time. well, at this point, if your credit is bad enough, no one will loan you money, well then, you can't start paying your bills on time then, can you?. you have to set yourself up to where people will loan you the money so you can prove that you can do it. this is how you do it. it takes time, yes, but time is a factor in determining your credit score, isn't it? get checking out that tax sale stuff i told you about. got to the county court house near you and every city government building near you and ask what they do with tax delinquent houses. you are going to stumble upon a deal, trust me.