Build credit for real estate investing..

Build credit for real estate investing..

Mancelona, MI · Member since 2017 · 17 posts · 9 votes

Imagine you are the mentor of an 18 year old kid that wants to get into real estate investing but has ZERO credit history.. 

Pretty much the position I am in.. No authorized user options available.. What would you recommend to them?

How many accounts and what accounts would you suggest for them to get on their reports and get them ageing in order to set them up with the best possible credit profile so in the future they can get approved for the best rates on Mortgages, refis, helocs, improvment loans, etc.? 

So they will be able to BRRRR and carry a mortgage on 10 rentals while still being able to finance more and everything you need to do to get rich investing other peoples money in real estate..

Get lots of accounts on there? Just a few? 

Should they also fire up an LLC or similar as early as possible to get their business credit building as well? Contractor business?

I have 4 credit cards started and an SSL set and forget loan with 7 months total of perfect history so far. What else to do?

The mortgage scores want you to have an auto loan but I have no need for or want an auto loan and it's not exactly easy cheap or simple to get an auto loan just for the sake of having an auto loan..  

Maybe I could refi cash out like $1,000 or so off of one of my cars and pay it back? 

Sounds like a silly thing to do but so does a secured loan or secured credit card but you have to play their game.. 

I just want to do everything I can while I can.. 

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  • Los Angeles, CA · Member since 2014 · 2k+ posts · 515 votes
    8y

    @Ed L. Hello and welcome to Bigger Pockets! You stumbled upon one of the best real estate investing sites on the internet!  Bigger Pockets is the best way to go when reaching out to experienced investors and getting deals done the right way.

    I have spent many years perfecting and sourcing undervalued property for immediate resale, Ed.  In my experience, starting out with rentals came with a few issues (AKA "landlord headaches").  Personally, I discovered that sending out offers to owners directly yielded me the most success.

    Don't get me wrong; investing in rentals is not a bad thing.  I just wouldn't recommend it to anyone starting out.

    Happy to help further.  Feel free to PM me.  Congratulations and I wish you all the best, Ed.

  • Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    8y

    @Ed L.

    In regards to credit, for the first card this individual can either use credit cards geared to students OR apply with Capital One (they are a good starter card).  If I was in this individual's shoes I actually would just go with Capital One and avoid the student cards.  The reasoning is that if the creditors know your a student, they'll be hesitant to increase your lines over time due to your limited income.  After several months of using, I would call and ask for credit line increases.  

  • Investor · Morrisville, NC · Member since 2012 · 1k+ posts · 673 votes
    8y

    @Ed L. Here are a few blogs who discuss improving your credit score. One written by Mindy.  Pay attention to the comments section, where others have added additional ideas. Here is another blog.


    Another good link from myfico.com

    Hope that helps. Good Luck !!!

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