I am curious to know if I can fix & flip properties with bad/no credit???

Question

I am curious to know if I can fix & flip properties with bad/no credit??? In my location it seems that's the best way to get into real estate due to the fact that Detroit has many vacant homes! A lot of homes here have GREAT potential. ANY advice from my fellow Colleagues or BP members would be appreciated.

Aaron Yates · Answer

I have researched this now for the past 1 1/2 years. I know exactly what you have in mind and what you will go through in the search for the answer to this question.

Many variables come into play in your situation. I was there and still am. I have spoken with literally over 30 types of lenders. Spoke with dozens of underwriters. Spoken with HML, self-acclaimed private lenders as well.

In the end, unless you have money, your friends have money, your family has money, or you havr a credit score above 720... you are up shits creek without a paddle. This is where creativity comes into play.

Hit me up sometime. A good lunch is a great way to bribe me... ha ha ha... I stopped offering my results here on BP because i got tired of the crap responses and disbelief I had to read from people NOT in my situatuion or market.

Wes Eaves · Answer

Hopefully @Joshua Dorkin doesn't see this post.  He has a few opinions about Detroit :)  Ha Ha!

Are there other areas around you that might be a little easier to find deals in that might get you the results you're looking to accomplish?  I know that areas that have really low values seem like they would be good deals, but if your exit strategy doesn't work then they aren't good deals.

Keep plugging away, I'm sure you'll come up with a good strategy!

Bill Gulley · Answer

You can also 'partner" with an owner. A property  owner can usually get credit at the box stores and suppliers, many owners` can't do the work or pay labor and a RE commission. Look for MLS listings over 120 days or expired listings.

A few jobs can kick start you into other deals. Plan carefully.

But as others have mentioned, get your credit in order! :)

James Sinclair · Answer

It takes money to make money in every deal I have seen.  If you don't have the money then you must convince someone else to supply the money.  If you talk someone into supporting you and you burn them with a bad deal it will probably be the last money you get from them or anyone they know.  If they make some good money working with you then you will be able to get more backers for new projects.

From what I have seen, in my area, a lot of wholesalers and new people are pushing garbage deals.  I am new but have studied quite a bit and have dodged some garbage.  So my suggestion would be get to the point where you can put together a really good evaluation package on cost in, rehab. cost, and exit plan.  You will then have something to show friends with money.

James Wise · Answer

Repair that credit.

2 most important things in Real Estate investing

1. Cash

2. Your ability to obtain cash.

Wes Eaves · Answer

I'm sure there are, and by no means am I an expert in that area, but I would just think it would be easier for someone in his situation to try a different area, if it's possible.  Either that or maybe he can team up with a successful investor and see what needs they may have that he could fill as a way to learn.

James Wise · Answer

@Wes Eaves The location is not the problem. Guys are making money in and around detroit. The problem is the o.p. is lacking in credit and capital.

Scott McMahan · Answer

I can relate to the feeling of excitement about houses in Detroit. There are some very cool houses in some very problematic areas that need a lot of work. And they'd have great potential - if they were someplace else.

The potential that you want to train yourself to look at is not the aesthetic or creative potential but the financial potential based on well researched and verifiable assumptions. Doing so will change the way you think and communicate, which will make you more attractive to those who have the pieces you currently lack.

Scott K. · Answer

In the end that will not be a cheap way to go.  Those properties have mold and water damage.  They need new roofs.  They need all the mechanicals, new plumbing and electrical.

Remember all these properties have been ripped apart from the scrappers.

I know you want to help out in Detroit.  But those good intentions will break you in more ways than money.  Remember you have to deal with the city.  The building department for permits.  That is a nightmare.

It took Kid Rock 3 months to get the city out to the house he rehabbed to do inspections.  So just imagine how long they would take with you

Wes Eaves · Answer

I would share the same concern as @Brian L. regarding the market for resale.

I am curious to know if I can fix & flip properties with bad/no credit???

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