Brand New investor, credit is crap, what are my steps?

Question

I have recently found bigger pockets and real estate investing in general. I have gotten super obsessed with the idea of being an investor and buying property.

Here is where I’m coming from

31

Single

Tulsa, OK

Waiter/Substitute teacher

In grad school

75k student loan debt

Credit in the mid to high 500’s

Very little access to cash

I understand this won’t be an overnight fix for me, but I’m committed to owning my first brrrr property in the next two years.

Outside of working on my credit what steps can I take right now to close on my first brrrr property in the next two years?

Neil Schoepp · Answer

@Brian Auman

Congrats on taking the first step to financial Independence. The first step is to make sure your financial house is in order. So boosting your credit score, having an emergency fund, living within your means so that you can save in a separate account 10% of your earnings more is obviously better. Do not carry credit card debt, car debt, personal loan debt etc.

Once your financial house is in order then you can start investing.

Where will you be investing?  Start learning that market inside and out. The first R in BRRRR stands for rehab. Start getting familiar with rehab prices. Will you take on a light medium or heavy lift. If you are going to invest local then start touring properties get a feel for the market. How much does a dollar buy in your market? What finishes are being supplied? Pay attention to paint colors room flow and layout, landscaping, etc. Follow the properties you tour from asking price all the way to selling price and how long they were on the market. Understand the difference between a 3/2 and a 3/2/2. Be able to answer what a 3/2 1500sqft home will rent for as well as what it's ARV is. Get to know your market inside and out block by block. Build your database. Do all of this side by side with getting your financial house in order.  As you start doing all these things more questions will arise, just keep asking lots of great people here will have guidance for you.

Be Unstoppable!

Jeff Cichocki · Answer

@Brian Auman, Welcome to the family. Lots of good advice here. Something to consider is wholesaling or bird dogging. They're not as sexy or glamorous as Flipping or BRRRR, but either can help you generate chunks of cash without tying up yours or anyone else's cash for any real amount of time. No real need for loans with this. Essentially you get paid as fast as your buyer can close.

Just my two cents.

Good luck!

Vanessa Goodheart · Answer

Welcome to the wonderful world of investing. Not so wonderful most of the time. You have to get ready to step outside your comfort zone and LEARN, LEARN, LEARN!!!

I did my first flip with only $82 dollars in my bank account. I had helped a group of investors with a few other flips and had a good idea of what to do so, decided to do it on my own. I convinced an investor to provide the down payment and promised a 12% return on his investment, then I convinced a contractor to front the cash for the rehab by promising to split the profit with him after we pay the investor. They both agreed and it was off to the races. Honestly, my first flip was the hardest. It took seven months to sell. I was working odd jobs to cover the payment. I fell out of escrow 5 times. I cried, but I kept going. Finally, closed after a long hard road and after paying everyone I netted $17,495.

I would compare it to having a child (but I wouldn't know, don't have any) the process is awful and you're going to doubt yourself, you'll wish you could go back but right when you think it can't get any worse they pull it out and hand you your profit check. All prior worries and pains seem to just dissipate. You'll forget how much you suffered and it will all seem like a distant memory as your walking to the bank to cash your hard earned money.

At your starting point I would recommend getting a job in real estate or construction management or exposing yourself to as many people in that field as you can. There's hard money loans that will lend to you with horrible credit, rent to own, seller carry  and many other crafty ways of financing your deals.

At the end of the day you're going to have to learn. Start anyway you can and the path will start paving itself.

Praise Emmanuel · Answer

Congratulations on discovering real estate! I would say you should first learn as much as you can https://www.biggerpockets.com/... (There are some potential books in the attached link). Try to live very frugal and save up as much money as you can. While doing this, try to build up your credit score, in other words, build up your financial house. Since you have very little access to cash, read up on hard money lenders (do your research as they are pretty expensive). Go to your local REIA and just try to let people know you are trying to get into real estate.

Brand New investor, credit is crap, what are my steps?

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