How to purchase a investment property with not so great credit?

18 Replies

I'm trying to do something different with my life and of course I'm starting pretty late. Anywho I want to purchase some investment property but my credit isnt all that great, is some kind of creative way for still accomplish this?

Creative? NO. Good credit takes time and discipline to acquire.  You need to pay off debt, pay bills on time, live within your means, make sacrifices on having all the things that don't really matter. Get a job (or a second job). Then start saving your money. In the meantime, spend about 100 hours on here reading and listening to everything you can.  

IF you work very hard, in about a year you could be ready to buy your first property. If you don't want to put that much effort into this, then you may want to consider something else. 

@April Ramsey Hello April. It is never to late, just ask Col. Sanders. Do not get me wrong. Tell will be a lot to learn, but that is not the problem. It is going to take will and determination, and I hope you have that. You need to start goiong to your local REIA meetings and meeting like minded people. Grab ever free piece of investor material you can get your hands on. Listent to podcast and find out what type of investor you want to become. I will help in anyway I can.

There are lenders that lend based on the performance of a property. There are also private lenders that you can partner with but you have to bring something to the table. If you're going to grab a hard money loan, often times they couldn't care less about your credit score if the property is performing well but most will want 20% down. There are also lenders that offer full funding on a flip, they have underwriters that verify the potential ARV, the rehab cost, and other factors, then they work with you and at the end you split the flip profit. In the beginning you might only get 20% of the profit for organizing the purchase of the home, organizing the contractors, and running it through to the sale but you'll have your feet wet and you'll have built a reputation with your lender.

Originally posted by @April Ramsey :

I'm trying to do something different with my life and of course I'm starting pretty late. Anywho I want to purchase some investment property but my credit isnt all that great, is some kind of creative way for still accomplish this?

April, not sure how bad your credit is, but if it's at at least 600 Mid FICO (or can be raised to that) you would qualify for short term loans from Hard Money Lenders such as us. So RE investment activities suited for Hard Money loans would be within your reach, at least as far as your credit score goes.

Best wishes on your endeavors. 

I’m purchasing a 4-plex right now with 15% down seller financing. The seller could have run my credit, but didn’t. Maybe you can try that.

Eric

Originally posted by @April Ramsey :

@Benjamin Hurwitz thanks for the feedback. So how do I find hard lenders?

https://www.biggerpockets.com/companies/hard-money might be a good start. Run a search for the state you wish to invest in.

Many will not lend in all states, many have minimum loan sizes and other criteria.  Most if not all will be pleased to have a short chat about what you had in mind and what they can offer.

I can think of a HML in Lincolnwood IL, for instance, a friendly lender who is available on PM, email and phone... ;)

Originally posted by @April Ramsey :

@Eric Mayer thanks for the feedback. Unfortunately I dont have that option, I guess I was hoping there's some kind of problem for first time buyers

You can get an fha loan with 3.5% down if you can get your credit score to at least 580. They will do it at 10% down if you are under 580.

@April Ramsey you have gotten great answers to the credit part so I will address the networking. If you key in 'Alaska Landlords Association' several organizations will pop up. That should get you started. I attend the Washington LL meetings, the rooms are full and they change locations. All the best!

If you are anywhere near Anchorage or the Valley we have a lot of RE meetups. I just came from one and there is another tomorrow with a different crew.

Real Estate Exchange was tonight, Landlords Almanac is tomorrow. Both offer free get togethers that are great for networking. I met a new hard money lender and a portfolio manager just today.