Getting into REI with Bad Credit?

Question

Some of my closest friends in my social sphere have finally came around after seeing the returns our team is making for REI.

They have concrete jobs with good solid salaries ($65-85K). However, they have abysmal credit and believe they will never be able to get the money needed to start their journey!

I would love to hear from any lenders or other investors who have encountered this same or similar issue. How can I help them get their first REI property?

Thuy Twee Nguyen · Answer

@Thayer Hood

They could pull equity from their home and do a HELOC.  That is how I am planning to finance my rental properties (when I start purchasing them).  Also, if they receive balance transfer checks in which they pay  0% APR and pay the 3%-5% transfer fee then that is also a possibility.

Matthew Irish-Jones · Answer

You can co-sign for them... Or try a hard money lender for a rehab and hold.

Tom S. · Answer

@Thayer Hood  Depends a lot on why their credit is "abysmal"?  Do they just not have a lot of credit?  Or do they not pay their bills on time?

Even with HML, I've applied in the past and most pull credit, they told me not so much for score, but to check if you have Bk's, foreclosures, liens, or a history of settling debt for less than agreed.

Certainly there are owner finance deals where it might not matter as much, but personally, I believe in the RE game, good credit helps a lot.

Joe Villeneuve · Answer

Good credit isn't required...at least by the REI in question.  Not all sources of funds require it.  Like anything in REI, what you don't have, you can substitute with the use of partners.

Michael Glist · Answer

If credit is bad to the point that a lender will not lend to them their options are go the wholesale route and use the money earned to repair/fix their credit or JV with someone who does qualify and again use funds earned to repair/fix credit until they get to the point where they can get funded on their own.

Getting into REI with Bad Credit?

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