When you are denied a home loan? Getting started?

Question

Dear BiggerPockets Members,

I have recently developed a great interest in real estate investing and am looking to get started. I have read and researched about getting started and have even made my first step in going into a bank and getting a credit checked to see if I am pre-qualified for loans. My problem is that I was denied because I don't have enough credit rating even though I have really good credit. The loan originator suggested that I work for a year and build a income first while paying off student loans so that I will have good rating; I just graduated college (completely different subject by the way). However this is still something I would like to pursue for my future. Is there any kind of advice anyone can give me about what I can be doing while I work to build my credit rating or if I have other kinds of options? I would also like to hear stories from anyone who wants to share about how they got started, or any kind of advice anyone can offer.

As for me I graduated with a BA in Theater and after graduating I realized it was not what I wanted to do for the rest of my life. I love working with people which was why I chose theater and acting has helped me with my struggles in depression, but I also realize now that I don't necessarily like working for people. I am telling about myself not because I regret choosing my major in college, but because I feel I don't have all the necessary skills to get started in real estate investing. For example I may struggle with fixing up my own property so at the moment I am volunteering to help my property/building manager fix up the apartment building I am currently living at and gain some experience in this part of the field.

Thank you to all who read all this and offered any kind of help, I really appreciate it!

Jerry Padilla · Answer

@Chue Xiong

I am confused by your statement that you have a really good credit rating, but not enough of a credit rating? Maybe I am reading it wrong? You only need a credit score of a 600 to get qualified for an FHA mortgage with no minimum trade lines. Have you had a job for the past two years? You may just need to try another lender.

Lynn McGeein · Answer

Large apartment complexes frequently hire property managers without requiring a license because they are employees of the company.   It can gain you both an income and experience in management.  My son was hired by the same company he interned with in college, but he still could not get a mortgage until he had 2 years of full employment with the company.  They did not take his paid internship as employment.  Not sure why, and it was very frustrating when he was turned down after a year thinking his schooling and internship would count for something.

Also, look for special programs in your area.  Many states have programs for low or no down payment loan help as long as you take a class in home ownership and some other requirements.

Chue Xiong · Answer

Also do you have any advice on building connections and other ways to build up experiences? I feel like I am reading a lot but not doing a lot because I don't know how to get started.

Chue Xiong · Answer

@ Melissa I found your advice to be very helpful and have been reading more into real estate investing from BP and found them all to be very helpful and are giving me resources I couldn't find before. I am now looking into making spreadsheets analysis as well as just how to do the analysis itself. I can see that this will not be something I can get done fast but I suppose if I'm not spending the time then I probably shouldn't be doing this. Thank you for your insight.@Zach I was actually thinking about getting a real estate license, however what are the benefits of doing this? I know that it can be costly, so I would like to know more about it first before I decide to jump into that part of the business. I've not heard much about investors getting real estate license actually. Is it common?

Zach Liu · Answer

The good thing is you are young and have many years ahead. Time is one of those valuable things in investment world.

To start out, it's all about building knowledge, building network, and building experience. And of course you should start building your credit.

If you really like Real Estate, why not take some time and get a license, that may be the quickest way to get into the game.

Good luck.

Melissa W. · Answer

Hello Chue,

First I want to welcome you to Biggerpockets!

That is a good start. If you find the right deal   and work in the repair costs in your deal, then you would not need to do the work yourself.  Just make sure you find contractors that have a good reputation.

If you need lenders to finance your deals, then you need to present them with a spreadsheet analysis of the property you wish to purchase, along with exit strategies.

BP has all the tools you need to present your deals in a professional manner.  They also offer video tutorials to show you how to use them correctly.

Hope that helps you.

Good luck,

Melissa