Real estate investing with recovering credit

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Real estate investing with recovering credit

Jose Diaz
Renter · Hialeah, FL · Member since 2014 · 239 posts · 27 votes

Hello to all. Since I am committed to my new venture as a real estate investor, I would like to have full disclosure with the BP community. I have been reading lots of great topics on BP and recommended books and I am very interested in the Buy/Hold strategy. In full disclosure, I have a bankruptcy and a foreclosure to my name. The bankruptcy is about 4.5 years old and the foreclosure with be 3 years ago in November of this year.

How do those 2 negative factors affect me regarding the buy/hold strategy? As of now, I am thinking of beginning with wholesaling to get my feet into REI and use the profits to pursue my goal of buy/hold.

Both negative experiences have taught me a lot. They were huge hits to me, being that I am currently only 31 yrs old. However, I firmly believe that we learn from our mistakes and my mistakes was lack of education. I am taking the time, my time to educate myself and fully understand and question everything I can.

Thanks ahead of time for the replies

Jose

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Barbara Riley
Columbus, OH · Member since 2014 · 61 posts · 19 votes
12y

Hi Jose,

I was able to significantly raise my credit score with the help of a book titled "Guaranteed Credit" by Arnold S. Goldstein, J.D., Ph.D. You didn't mention whether you have credit negatives other than the BK and foreclosure. This book is very helpful with typical credit problems including sample letters to the credit bureaus and creditors. Discussion on rights and strategies that actually work. He does also address BK and foreclosures. My copy is the 1995 edition and is available at Half.Com for less than $5 including shipping. (At least it was.) I think there is a newer edition, but even the 1995 version is very enlightening. Just thought I'd pass that along since it helped me a LOT! And, the price is right. lol. Good luck!

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @Jose Diaz your foreclosure and bankruptcy will come up on a credit check so you will just have to shop around with lenders which you should do anyways. Lenders have been getting more relaxed with who they lend to and requirements needed. Right now if you are wholesaling your past will have no affect on anything. Start talking to lenders to get a good idea of what requirements you will need to own buy and hold properties. Of course there are many other ways of owning properties through none traditional forms of real estate i.e. partnering, subject to, owner financing etc

    973-975-3895
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  • Jose Diaz
    OP
    Renter · Hialeah, FL · Member since 2014 · 239 posts · 27 votes
    12y

    @Shawn Mcenteer

    I need to shop around some more. Even if they state their requirements upfront and I qualify, what assurance is there that it will pass underwriting and close?

    I am learning about those other non-conventional ways of investing as we speak. Lots to learn

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @Jose Diaz not sure what guarantees you will get but your local REI meeting will be a great place to find people that have at least been involved with situations like yours. I spoke with a lender last month that is very relaxed lending to foreclosed clients with low credit score as long as they could prove sufficient and consistent income from there employer.

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
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  • Jose Diaz
    OP
    Renter · Hialeah, FL · Member since 2014 · 239 posts · 27 votes
    12y

    Shawn, it's good to hear a lender being relaxed. Would it be ok for you to send me information on that specific lender?

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @Jose Diaz Not sure if he will lend in your area but I will be happy to forward his info to you. Private message me.

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
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  • Barbara Riley
    Columbus, OH · Member since 2014 · 61 posts · 19 votes
    12y

    Hi Jose,

    I was able to significantly raise my credit score with the help of a book titled "Guaranteed Credit" by Arnold S. Goldstein, J.D., Ph.D. You didn't mention whether you have credit negatives other than the BK and foreclosure. This book is very helpful with typical credit problems including sample letters to the credit bureaus and creditors. Discussion on rights and strategies that actually work. He does also address BK and foreclosures. My copy is the 1995 edition and is available at Half.Com for less than $5 including shipping. (At least it was.) I think there is a newer edition, but even the 1995 version is very enlightening. Just thought I'd pass that along since it helped me a LOT! And, the price is right. lol. Good luck!

    1Reply
  • Jose Diaz
    OP
    Renter · Hialeah, FL · Member since 2014 · 239 posts · 27 votes
    12y

    @Barbara Riley

    I don't have any negatives other than the BK and Foreclosure. Last I checked my credit score was about 670 or so, maybe higher now that I have cut more debt. Problem I have run in to is that most banks I have spoken to won't accept a mortgage with less than 3 years after a foreclosure. This is even using the FHA route which is more relaxed.

    Thanks for recommending a book. I am always up for a new book.

    0Reply
  • Richard Palmer
    Renter · Arnold, MD · Member since 2014 · 14 posts · 1 vote
    12y

    Jose,

    Why don't you look into getting business account started. From what I understand, there are companies out there that get you started building a A+ business credit account in about 6 months time. Then you can buy a house with an LLC or Corp. You should not be buying in your own name if its for investing.

    Hope that helps,

    Richard

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  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Richard Palmer,

    You can buy with an LLC or Corp, but you forgot to say you will need to personal guarantee the loan. If you know a lender that will lend base on a stand alone LLC or Corp with no personal guarantee can you share it with everyone.


    Joe Gore

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  • Margo Roberts
    Investor · Pleasanton, CA · Member since 2013 · 59 posts · 13 votes
    12y

    Jose,

    I might suggest you start in with wholesaling, as credit is not as much an issue in wholesaling, as it is in qualifying for most loans. One loan you might consider, however, is Transactional Funding (when you are unable to assign a contract.) This is where you have a purchase contract in place for a property and you also have a buyer, for the same property, at a higher price than the purchase. You do not have to qualify for the short term loan, you get 100% financing, and the only requirement is for you to have a buyer in place. It is fairly easy to get a POF letter from lenders for the purchase.

    This would be one way to build up a down payment for your buy and holds.

    0Reply
  • Jose Diaz
    OP
    Renter · Hialeah, FL · Member since 2014 · 239 posts · 27 votes
    12y

    @Richard Palmer

    It was suggested to me on a previous topic I posted on BP to know incorporate now because I have no real income stream or properties. Everyone suggested I just jump in, get started and look at incorporating down the line.

    I thought about incorporating for the same benefit you mentioned. I did have an LLC I was using for my private practice and was able to get approved for a business cc. I assume it was personally guaranteed. Have you found a specific company that can lend to business in 6 months?

    @Margo Roberts I want to start with wholesaling for the reason you mentioned. Miami is going to be tough, however there are always possibilities here and further away.

    Transactional funding sounds interesting, can you educate me some more about it?

    0Reply
  • Timothy Riley
    Investor · Chicago, IL · Member since 2013 · 451 posts · 96 votes
    12y

    @Barbara Riley
    I just placed an order for "Guaranteed Credit" by Arnold S. Goldstein, J.D., Ph.D. on amazon for a penny plus $3 S&H. They have a 2002 version for $24.

    0Reply
  • Barbara Riley
    Columbus, OH · Member since 2014 · 61 posts · 19 votes
    12y

    That's even cheaper than Half.Com, and I thought I had a deal. lol

    I can tell you this guide helped me enormously. It links you to the relevant consumer protective legislation (may need to track down updates) and let's you know why actions that may seem like the best thing to do, can actually be the worst. Agreeing to small monthly payments vs letting the statute of limitations run out, for example. (Payments restart the statute clock.)

    After you get a feel for his approach, you may think the newer version is worth the extra $$. Let us know what you think.

    0Reply
  • Timothy Riley
    Investor · Chicago, IL · Member since 2013 · 451 posts · 96 votes
    12y

    Thanks @Barbara Riley
    I'll put that extra $20 on a bill and wait for a newer version LOL.
    @Jose Diaz
    I'll be sure to let you know also.

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