Mo Money or Mo Credit: Which is more important for a new investor

2 Replies

Lets just say that I have a friend who has a very stable job, makes a good salary, has been at the same company for many years, has great credit and is extremely stabile.  All this to say that they are a lender's dream and can adequately fill the 5 C's of leding (Credit, Character, Capitol, Collateral, and Capacity). 

They received a job offer to go into a different industry where the compensation is substantially higher than they currently make however it is also extremely competitive and can be somewhat unstable.  They now might appear to be unstable to a lender (portfolio or national lenders and private money) due to the industry or just for the short amount of time that they will have been in the new role.

As a new investor, is it wise to leave stability and for a more lucrative option that would allow access to more capitol and there by increase the rate of property acquisitions?

What matters more to you in REI - Credit or Capitol?

Well, money pays the toll, but credit builds the road in front of you. If I had to pick only one, it would depend on my savings, portfolio, and long-term goals. If I had no houses and no savings, credit. If I had some houses and no savings and wanted to grow, credit. If I had some houses and some savings and wanted to grow, tossup. If I had some houses and some savings and was about where I wanted to be, cash. 

It also depends on the "substantially more". A 20% pay increase if you're making 40 grand is only 48 grand. If you're making 200 grand it's 240 grand. 

@JD Martin that is great insight, thanks for sharing! I agree with the vagueness of "substantially more". The POTENTIAL is for an additional 75k-100k a year to invest once they get up and running. On the flip side, I suppose that having access to that much money with no experience could be a bad thing if they don't do their due diligence.