How to invest with horrible credit

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Originally posted by @Account Closed :
Originally posted by @Joe Villeneuve:
You don't live in a house with a sandwich lease.  You lease/option it from a seller, then you turn around and lease/option it to someone else (the ultimate tenant/buyer).  You are in the middle (the "meat"), and you make money on the "spread".  Thus the sandwich.

Joe, what would be the difference between a sandwich lease and a wholesale deal?

 Usually a wholesale deal allows you to tie up the property for a very limited time period, there is no cash flow involved, and no profit at the end when the tenant/buyer exercises their option to buy.

You can get up to a three year lease/option at the investor end (in the middle), and do a series of 1 year lease/options at the back end until you sell the property.  You would make one profit at the time of option execution (whichever year that happens at), but you would make cash flow and option consideration for the years previous to the sale year.

Brian, you forgot to mention.....use cash! :)

My BS Meter is going off again.......

Why is "Mack the knife" playing in my head? 

There are plenty of ways to operate ethically and legally with poor credit, if you are weak in one area, you need to be stronger in another area to make up for that weakness. No credit, more money or more knowledge or more labor, this formula always works. :)

Originally posted by @Joe Villeneuve :

Usually a wholesale deal allows you to tie up the property for a very limited time period, there is no cash flow involved, and no profit at the end when the tenant/buyer exercises their option to buy.

You can get up to a three year lease/option at the investor end (in the middle), and do a series of 1 year lease/options at the back end until you sell the property.  You would make one profit at the time of option execution (whichever year that happens at), but you would make cash flow and option consideration for the years previous to the sale year.

 Got it, thank you!

>>No credit, more money or more knowledge or more labor

So true Bill!!

A fellow I'm reading and watching his videos, Tai Lopez, said:

- you can't do a deal type you don't know about

This comment follows this one:

- be a book reading nut, read and learn continously and fiendishly.

Knowledge can over come all short comings.

Originally posted by @Ernie Thivierge :

hello everyone. 

I could use some advise.  I'm recently divorced and need to move within the next couple of months. During the divorce my credit got crushed. Had to short sale my house and my x wife got her truck repossessed which was under my name. I was going to rent for two years while I rebuilt credit. Are there any ways to control and    Invest in a property I'm living in then sell for a profit in two years when I'm ready to buy a more suitable house? Or am I pretty much stuck renting until my credit goes up? I appreciate any advice. Thank you!

 Hello Thivierge,

First of all, I will to express some sympathy in regards to your current situation. You should focus on maintaining your composure psychologically before anything else take precedence. You will functioning a lot better with a clearer mind. 

Originally posted by @Account Closed :
Originally posted by @Joe Villeneuve:

Usually a wholesale deal allows you to tie up the property for a very limited time period, there is no cash flow involved, and no profit at the end when the tenant/buyer exercises their option to buy.

You can get up to a three year lease/option at the investor end (in the middle), and do a series of 1 year lease/options at the back end until you sell the property.  You would make one profit at the time of option execution (whichever year that happens at), but you would make cash flow and option consideration for the years previous to the sale year.

 Got it, thank you!

 Hi Kristy,

Learning about the exemptions to the Due on sale Clause through the Garn St Germaine Act of 1982 is important with lease options.

See

http://www.biggerpockets.com/blogs/3/blog_posts/45...

Originally posted by @Brian Gibbons :
Originally posted by @Kristy Good:
Originally posted by @Joe Villeneuve:

Usually a wholesale deal allows you to tie up the property for a very limited time period, there is no cash flow involved, and no profit at the end when the tenant/buyer exercises their option to buy.

You can get up to a three year lease/option at the investor end (in the middle), and do a series of 1 year lease/options at the back end until you sell the property.  You would make one profit at the time of option execution (whichever year that happens at), but you would make cash flow and option consideration for the years previous to the sale year.

 Got it, thank you!

 Hi Kristy,

Learning about the exemptions to the Due on sale Clause through the Garn St Germaine Act of 1982 is important with lease options.

See

http://www.biggerpockets.com/blogs/3/blog_posts/45...

 Doesn't apply.  There is no sale until the option takes place....and when it does, any current loans in place are paid off.

Originally posted by @Joe Villeneuve :

Sandwich Lease Options.  No credit needed.

 I was going to suggest lease options, as I'm in the same boat (rebuilding credit in hopes of purchasing one day for myself, and investing later), but I've come across lease option opportunities. Anyhow, Mr. Villeneuve, could you please expound on Sandwich lease options? I've never heard of that phrase and am curious as to how it works, so please explain (and also is having a down payment or security deposit necessary)?

Thanks in advance,

Stephanie Dobbs

@Ernie Thivierge  If you are trying to get a house for you go with an owner finance or lear option. 

As a buyer, I'd prefer an OF as you'll get title, but close at a title company and get clear title. 

as far as making money in RE, the power is in the paper. I like LO's, wholesale and sub-2. 

For you. I recommend LO's and wholesale. 

@kristy 

@Account Closed undefined often tell people not to do a SLO or sub-2 unless you have reserves.

I did an SLO many many moons ago and it was the worse situation ever.   Even the almighty God didn't know there were that many cockroaches alive......YIKES!

Do a couple years of deals then do SLO's. 

A lot of good answers here. 

Personally, I would focus on a MOTIVATED SELLER and work with the following: 

1. Seller financing

2. Lease purchasing (lease a property and sublease it to students/tenant) 

3. If you need a loan -- Don't go conventional loan, go to a local credit union. 

Find a credit partner, structure LLC with 19% ownership, credit partner 81%, the bank won't look at your credit because it's below 20% ownership, then get the seller to carry a note for 10%. Then use a private lender for the remainder 10% or a business credit line.

4. Buy with a land contract (deed doesn't transfer at closing, deed transfers at payoff)

5. Buy with a land trust. (if this is your first deal, eventually you want to use this more often for asset protection).

6. If you want to get creative, trade a personal asset (car, boat, etc) for another property. 

7. Subject-to. 

this community is awesome, so helpful. I think I'll try and find a credit partner. Property has motivated seller. Asking below market price. While I live there I can update some simple things and turn it over for a profit for me and partner.  Thank you so much everyone!

Originally posted by @Stephanie Dobbs :
Originally posted by @Joe Villeneuve:

Sandwich Lease Options.  No credit needed.

 I was going to suggest lease options, as I'm in the same boat (rebuilding credit in hopes of purchasing one day for myself, and investing later), but I've come across lease option opportunities. Anyhow, Mr. Villeneuve, could you please expound on Sandwich lease options? I've never heard of that phrase and am curious as to how it works, so please explain (and also is having a down payment or security deposit necessary)?

Thanks in advance,

Stephanie Dobbs

 There are three parts to a Lease/option.  Lease payment, Purchase price (option) and option consideration (this is what you pay to buy the option to buy the house down the road).

A Sandwich L/O is where you Lease/Option from the owner of the property (control it now), and Lease option it to someone else that actually lives in it and intends to buy it down the road. You make your money in the spreads of Rents, Purchase Prices and Option Considerations...you make your money being the "meat" in the bun and make it on the "spread". Hence the term "Ssandwich Lease/Option".

Originally posted by @Ernie Thivierge :

hello everyone. 

I could use some advise.  I'm recently divorced and need to move within the next couple of months. During the divorce my credit got crushed. Had to short sale my house and my x wife got her truck repossessed which was under my name. I was going to rent for two years while I rebuilt credit. Are there any ways to control and    Invest in a property I'm living in then sell for a profit in two years when I'm ready to buy a more suitable house? Or am I pretty much stuck renting until my credit goes up? I appreciate any advice. Thank you!

 Been there and done that about ten years ago, got the post card and everything. You are in the right place. The foundation of all of of real estate is networking.  You need to be networking all the time, none of these things will work IMO without connections. Always be networking and always be closing.

Originally posted by @Joe Villeneuve :

 There are three parts to a Lease/option.  Lease payment, Purchase price (option) and option consideration (this is what you pay to buy the option to buy the house down the road).

A Sandwich L/O is where you Lease/Option from the owner of the property (control it now), and Lease option it to someone else that actually lives in it and intends to buy it down the road. You make your money in the spreads of Rents, Purchase Prices and Option Considerations...you make your money being the "meat" in the bun and make it on the "spread". Hence the term "Ssandwich Lease/Option".

 Thanks for the explanation! I will be sure to try this, as I have two potential lease options in the works.

Regards,

Stephanie Dobbs