What other routes are possible to secure deals

Question

Hey, has anyone secured any loans/deals even when their credit score was too low? If, so how did you do it?

currently looking to buy a fix and hold or multifamily with tenants in place or single family with tenant in place.

Julia Lyrberg · Answer

Hi Debret,

How low are we talking? Most hard money lenders require a credit score of 600+, but I’d recommend working on building your credit before taking on a fix-and-flip project. Refinancing could be a challenge if your score hasn’t improved by then. Plus, a higher credit score will help you secure better pricing. Additionally, Lenders can assist with a rapid rescore, working with credit agencies to guide you on which cards to pay down to boost your score.

Alex Craig · Answer

When I got started it was finding older, experienced investors. Create a relationship and show that I am eager, hard working and committed. Then partner up with these people. I did my first 50 or so deals bringing $0. I found the deals, put together the plan and executed it. Now I am wearing the other shoe and it’s nice. Just have to be good at selling yourself.

Evan Polaski · Answer

@DeBret McGee II, I would generally say try to find a partner.  In my limited experience, HML may not care too much about your credit but they will care about your, presumed, lack of experience.  There are probably some out there, like Ryan noted, but they will be very expensive, and may make it hard for a deal to pencil.

I would go to local meetups and talk to other investors.  Note that you are out hunting but have limited experience, so wondering if they would consider keeping you on as a partner in the future if you are bringing them good deals.  Don't start the convo with this, but this would be the ask.  Most experienced people are limited by deal flow, so you offering to bring them deals could be a huge value add to them.

And while you are working to meet investors and source deals, I would be doing everything to clean up your credit.  Real estate is a capital intensive business.  And the cheapest capital comes from traditional lenders, who will want good credit score and financial wherewithal from the borrower.  If you want this to be your business, having access to the most capital at the cheapest rate is a necessity.

Ryan Konen · Answer

Securing loans with a low credit score is possible through private or HM lenders. Other options include partnering with someone with better credit, negotiating seller financing, or leveraging existing property as collateral. Based off of the sellers mortgage percent or if they own the house outright seller financing or sub2 might be your best bet. Alot of sellers aren't versed in that so if you can educate them you can probably get them to do so.

DeBret McGee II · Answer

I’ve thought about that and creative financing along with a few options. I just didn’t know my credit was so long until I chose to get pre approved. I was in between jobs for the moment but now moving to Omaha which will allow me to get connected to other investors once I’m there.

River Sava · Answer

Hey DeBret -

It is possible. Have you looked into partnering with other investors? That could be an option for you, as some lenders will take the higher credit score

Nathan Gesner · Answer

Here's the hard truth: if you can't manage what you've got, you won't manage what you gain.

Someone wins the lottery and ends up bankrupt a couple years later. Sports stars earn $10 million in five years, then wind up on skid row.

If you do not know how to control money well, adding more to your bank account will only create new problems. This is even true for student debt.

I recommend the old-school, proven technique of paying off all debt. Learn how to budget. Build your credit. When you have strong financial discipline, then you'll be ready to invest. It may take a few years to get there, but you'll start from a strong foundation and be far more likely to succeed.

Alex Craig · Answer

Not really. I started back in the days where foreclosures were abundant. I would find REO's and would purchase, renovate and sell with the backing of other people's money. Mostly we would sell to investors. It was crazy back then. Buy a home for $30,000. Put $10,000 into. Rent for $850. Sell for $65,000. Those homes are now selling for $150,000 and renting for $1,250. I kept quite a few, but would be retired had I kept them all. :(

DeBret McGee II · Answer

It’s 531. I’ll be reaching out credit agencies to get my score in order but I also have student loans as while which isn’t helping me at all until they’re paid off.

What other routes are possible to secure deals

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