Bad Debt

2 Replies

Hello Community,

I am a green investor and anxious to get started but have one issue. Due to a failed business, I have a $20,000 tax lien on my current primary dwelling. I do have much more than that saved up, but have almost no real "income" to speak of right now as I am in career transition. I want to use the cash I do have for property investment and not squander it on paying off the lien at this point. Will this lien block me from obtaining hard money? What money sources would be best for me in a buy and hold strategy if not hard money?

I thank you for any responses.

The answer will depend on the individual hard money lender.  They may not even discover it unless it is on your credit report. More important to them will be the equity in the property, and your experience.  Your best option may be to partner with someone on your first deal. 

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/

I would think the Lien would make your credit pretty bad and in turn make getting a loan very difficult.  You might want to look at what your interest rate is on the loan.  If it is pretty high you may actually be ahead in paying it off.  If it is 2 or 3% great, but i suspect it is a lot higher.  If you are accruing 10 or 12% annual interest you have a hard time making enough of a spread to come out ahead.  Good luck.