Help! How do I get a loan? Young, no credit, and practically penniless.

6 Replies

I am a young student (21 to be exact) looking to invest in real estate. I work part-time, and the income just isn't enough to support myself. After rent and all my other bills, I am left with literally pennies every paycheck. It is so stressful and the job search has been long and tedious. I worked two jobs for a while, but that left little time for school...or anything else for that matter. I needed something else. Investing in real estate seems like my chance to not only alleviate some of my financial stress, but to begin forming a potentially lucrative career!

I have been doing as much research as possible the past several months, as I am very excited to get going, and feel as though I have the beginnings of a very good plan. My goal is to invest in a multifamily property, to omit my own personal rent, and to provide small cash flow. Then I could focus on school and my real estate career instead of working so much just to keep my head above water! I am confused as to how I will obtain a loan though. My plan is to pursue a fixed rate FHA loan because they require so little down. The problem is, I have no credit as of now (working on that!) and my parents have absolutely TERRIBLE credit. My chances of easily obtaining that loan seem very low at this particular time. I read that lenders will sometimes provide exceptions to those with inadequate credit, but my income is so low I don't see that happening.

I remember reading somewhere though that it is possible to find an investor who's contribution is purely their credit/ability to obtain a loan. Is this true? If so, how do I even begin to find someone willing to do that? Otherwise, what would you suggest for someone in my situation?

Even with an investment partner, you are going to need a down payment.

theres lots of lovely houses (and bargains) to be sold in riverside/corona area! i'd get my re salesperson license, hang it with a broker, and start helping people buy homes at least as a buyers agent. as a buyer's agent u still make around 1/2 to 1/4 of the total commission (assuming a 50/50 split or 50/50 two-fold) and that could quickly rack up to ur first downpayment in a couple years (and time flies).

as for hard money and private money loans, those are for short term situations cuz of the steep interest and/or loanshark terms.

@Nyoka Gilbert

I would focus on start saving some money, When you find the right deal the money will follow. In your situation you will need to be very creative in your financing. The option I would recommend and have recommended to my son is to get a duplex/ triplex/ quadplex. Live in one side and rent out the others. At a minimum this will have the tenants paying your mortgage and you can focus on generating a cash flow deal. Read the Ultimate Beginners Guide under the learn tab for some ideas on creative finance. Another good book for creative finance is The Book on Investing in Real Estate with No (and Low) Money Down by @Brandon Turner . A great read as well with some great ideas for the inexperienced investor. Hope this helps.

George

@George Calbert

Hi Geroge, thank you for your reply. This duplex/triplex/quadplex idea is exactly what I am hoping to do! It sounds like a great way to get started.

I am halfway through Brandon Turner's book (I am listening to it right now haha), and have begun reading the UBG. Hopefully I will find the answer to my financial questions there!

Account Closed

Hi there, 

I am hoping to get my license by the end of this year! I just don't want to wait until then to get started >.<

Thank you!

investing is building one's portfolio, one way or another. 

if i didnt have the credit nor finances yet to build my portfolio - and around a decade ago i didnt - i'd at least get started on building my knowledge, education and licenses. lookin back, afterall, that's how it happened for me at least, gradually. i didnt just wake up one day and decide investment is the crux of my life (and it isn't).

even just being active on BP gets one somewhat closer to eventually one's first property in one's portfolio/track record.

If you find another college friend with the same real estate goal and  perhaps you could buy your first duplex or tripled/quad together.  Post an add for her at your school.  You and your co borrower could rent one of the rooms in your apartment to another student

Perhaps You could get a second job long enough to get qualified for the FHA Loan with your co borrower.

You could take 6 months off from school and concentrate financially on getting approved for the FHA loan.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.