Creative Real Estate Financing
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Accessing equity with bad credit
I own my house for about 360k and it’s worth near 1 million. I have found my self in a terrible financial situation. My credit is around 500 and I am behind on my house payment. However, I have started a great new career but it is going to take around 45-60 days before I start getting paid. Is there anyway for me to get even a small amount of equity out of my home? Just a small 10,000 loan would give me some breathing room for the next month or two.
It was like the perfect storm I lost my job and was in a car accident. It took my insurance company almost a year to fix this vehicle and it’s a 30000 dollar car that I owe like 3,000 dollars on but it’s about to get repossessed. I don’t have any credit card debt but I have several other bills that are like utilities that are getting past due and I am literally flat broke. My electricity, water, phone every is about to get shut off and my car repossessed. In 60 days I will have a good income but I’d rather not lose my car or be without electricity. I’d love to get access to even just a 5-10k in equity from my house I know my credit is terrible but there is 500k in equity and soon I will have a steady income.
You certainly can go to a local REIA and seek out someone with cash or a self directed IRA that may either give you a loan in 2nd position or you could sell an Option on your house for the cash you need. If you sell an Option, you would not have debt payments, but they may want to exercise the Option right away, so you meed to think about the language you put in it.
Example.
I gave an owner $4500 to stop a tax foreclosure on his property in exchage for an Option to purchase it for 18K sometime in the following 10 years. But I could not exercise my Option for the 1st 2 years and they had the right to buy my Option back in that same time period.
It's been 5 years now and I still hold the Option. The property owner doesn't owe me anything, but within the next 5 years he will have to sell to me or renegotiate with me.
@Eric Edling - Have you considered selling your property to give you some breathing room? If your property is worth a million, your return on equity in small at best. You could use that equity to buy way more proprety that spit out cash flow as opposed to a single family which is purely an equity play. I would consider selling, using those funds to get yourself back on your rent, rent and look to redeploy that money into cash flowing real estate. Just a thought. Better to get paid for your house than to lose it to the bank.
Lastly, do you have a 401K you can borrow from or cash out? That is also another option given your situation.
-
Real Estate Agent MA (#9576338)
- Candor Realty Worcester
- 857-267-6556
- [email protected]
- Podcast Guest on Show #69
He never bought the option back? Was there a set price at which he could buy it back?
hey never bought the option back?
Quote from @Derek Dombeck:
You certainly can go to a local REIA and seek out someone with cash or a self directed IRA that may either give you a loan in 2nd position or you could sell an Option on your house for the cash you need. If you sell an Option, you would not have debt payments, but they may want to exercise the Option right away, so you meed to think about the language you put in it.
Example.
I gave an owner $4500 to stop a tax foreclosure on his property in exchage for an Option to purchase it for 18K sometime in the following 10 years. But I could not exercise my Option for the 1st 2 years and they had the right to buy my Option back in that same time period.
It's been 5 years now and I still hold the Option. The property owner doesn't owe me anything, but within the next 5 years he will have to sell to me or renegotiate with me.
this sounds like a perfect option for me sell a 10k option for a year with set price I can buy the option out at. You said I could find someone willing to do this at a local REIA?
Quote from @Derek Dombeck:
You certainly can go to a local REIA and seek out someone with cash or a self directed IRA that may either give you a loan in 2nd position or you could sell an Option on your house for the cash you need. If you sell an Option, you would not have debt payments, but they may want to exercise the Option right away, so you meed to think about the language you put in it.
Example.
I gave an owner $4500 to stop a tax foreclosure on his property in exchage for an Option to purchase it for 18K sometime in the following 10 years. But I could not exercise my Option for the 1st 2 years and they had the right to buy my Option back in that same time period.
It's been 5 years now and I still hold the Option. The property owner doesn't owe me anything, but within the next 5 years he will have to sell to me or renegotiate with me.
Quote from @Eric Edling:
He never bought the option back? Was there a set price at which he could buy it back?
There was a set price and he never bought it back.
Yes, your local REIA is a likely place to find an interested person, but don't overlook BP. Perhaps you should post in the market place forum and find someone in this community.
thank you!
Quote from @Derek Dombeck:
Quote from @Eric Edling:
He never bought the option back? Was there a set price at which he could buy it back?
There was a set price and he never bought it back.
Yes, your local REIA is a likely place to find an interested person, but don't overlook BP. Perhaps you should post in the market place forum and find someone in this community.
I have seen these terrible scams they are running now that a lot of people have so much equity in there home but after Covid I’d imagine many people have credit issues but these company pretend like they are giving you access to equity in your home but they are actually buying your home and renting it back to you. For an uneducated consumer or depending how strong their sales team is this is a very raw deal.