Straight out of College

[Juan Carlos Castillo]

I made a lot of bad decisions in college,  I started partying, racking up loans (even though I had full scholarships) and somehow still managed to max out two credit cards. It's been a year since I graduated college, and I've now worked down $20k of debt (10k/30k in student loans and 10k/20k in car loan), and also got my credit score back up from 500 to 700 after missing three months of payments on two cards in college. What a mess right?

I'm trying to get my finances in order and have always been interested in real estate, I even went to school for civil engineering (my dream is to design, build and rent my own apartment building). I just applied for my first FHA loan which my realtor said should have been an easy approval, but got denied because of the missed credit card payments on my report 2 years ago. I'm just looking for some general advice on how I should set myself up. I want to jump in, possibly into a fix and flip, but i feel it would be even harder to get that approved through a bank than the FHA loan I just got denied for, would it be completely idiotic to try to get a private lender/hard money loan for a fix and flip?

[Ed Emmons]

 It might be a good idea to team up with a local investor and do one together since you’re just starting out. Also filling out your profile so others will know what your goals are and exactly what you’re looking for so that possible investor partners will know that you’ve done a little homework on your own. Also take the time to read, listen to podcasts, etc. and educate yourself as much as possible.

[Melvin List]

@Juan Carlos Castillo I would reach out to another lender or broker. Your missed payments should not really matter since they were so long ago. If you can verify your income and you have a 700 score I would think that FHA would be the way to go unless I am missing something.

[Thomas S.]

Keep working on your credit. Get yourself 2 years in a good solid career then begin your business plan to invest. A solid foundation with a good paying job is essencial to begin. Short cuts will likely lead to failure.

95% of new investors fail. If you do not want to be one don't look for short cuts.   

[Juan Carlos Castillo]

@Melvin List I honestly was thinking the same thing, but I'm if i go the route of getting a turnkey rental I might as well wait till those missed paents get removed from my credit report in the upcoming months and see my credit score shoot up.

[Juan Carlos Castillo]

@Ed Emmons Would it be easy to partner with a flipper? I'm not sure what I would be able to bring to the table or why he would want to mentor me (This route will probably result in me quitting my job and taking less pay). I was thinking of applying at a big homebuilder (like lennar or toll brothers) as a project manager to get a feel for estimating costs, and labor times.

[Chris Clothier]

@Juan Carlos Castillo - I would not recommend using a large, national lender or mortgage broker or even an online type of lender to get qualified.  I would recommend you create a bank book, this is something you can google online or on Youtube to watch a video on how to create a bank book, and work with local banks.  You want to create relationships with local, small branch banks that are looking for people just like yourself to build lending and banking relationships with.  

This is a great way to get started.  

[Caleb Heimsoth]

@Juan Carlos Castillo. If you’re still fixing your credit just mainly keep paying off your debt. Someone who is fixing their credit doesn’t need to go borrow more money right away. Pay off what you have first, then get your credit score above 720 and then maybe think about it

[Juan Carlos Castillo]

@Caleb Heimsoth I'm at 740, and am probably gonna have to wait until they remove these marks off my credit report in 3-6 months.

[Caleb Heimsoth]

Originally posted by @Juan Carlos Castillo:

@Caleb Heimsoth

I'm at 740, and am probably gonna have to wait until they remove these marks off my credit report in 3-6 months.

Then just pay off your debt more and wait that amount of time.  That’s the simplest solution 

[Jabari Long]

@Juan Carlos Castillo I suggest contacting another lender. Those late pays should not prevent you from qualifying FHA. FHA has the 203k acquisition and rehab loan program that I suggest you investigate. It can be used on 1-4 unit properties. This is an excellent way to get your first investment deal and live rent free.

[Account Closed]

@Juan Carlos Castillo 1st lesson: -Correcting the mistakes, taking accountability, and never repeating them. Seems like you did that. 2nd lesson: -Don’t give up. Go to another lender, or better a loan broker who specializes in FHA. How? Google and dial. But be organized, have all the financial docs ready (W2s, bank statements, loan statements, etc). A good broker will package it up for the underwriters 3rd lesson: -Read and Learn. REI for those that are truly successful are for the educated about all facets 4th lesson: -Locate a mentor in your area. Go to meet ups or use the search function on BP and the articles to on how to locate one and get one. 5th lesson: -Pay it back. Locate someone else who is in a similar situation and help them. REI is a people business also. Dealing with people in difficult situations is part of the gig. But don’t let tenants walk all over you. So my advice is pay off the student debt, consumer debt, and live below your means. Save your $. Get your credit score up. And never give up. Goodluck!

[Ed Emmons]

@Juan Carlos Castillo as a civil engineer your services are needed in sub-divisions. If you have 5-10 hrs a week to search for or research properties, that would be valuable to a flipper. Just be creative and start networking.

@Thomas S. curious where you came up with the number of 95% of investors fail. I don’t know why anyone should if they educate themselves first and especially combined with a mentor.

As far as how long you wait to get everything just right with your credit is up to you but if you want the fast track you could have a lot of properties by then by applying yourself and taking action. I had $700 and no credit when I started and bought 12 properties in the first year but I wanted it and hustled. I was also employed at the time.

I wish I had the resources available here when I started. Really if you immerse yourself in all that is available, there is really no excuse if take action.