Realtor Newbie with Capital Needing Help, Loans, 1031x advice!

[Wyatt Michael]

Hello. My name is Wyatt. I have a few questions for the BP community and really need some help right now. I am BRAND NEW to Bigger Pockets and also to real estate investing. I just sold my home property in NC and moved to SC for possible investment opportunities here on the SC coast. I was a licensed real estate agent (REALTOR) with Keller Williams and EXP Realty and did very well in NC, but not licensed at this moment in SC (I represented myself on my own deal as well - which took 5 months of haggling for a land developer deal).

I now have a bit of money to put into real estate. The sale date was May 26th 2020. I am wanting to hit up the 1031 exchange deal if I can, if it is applicable to me. I have not yet bought a new home and am renting now until I get situated. I have an issue. My credit took a major hit this year. Approx 4 years ago my wife's credit and mine was excellent. Upper 700s. We fell onto hard times and I took out several loans and credit cards. (We had none at the time, no debt). Over the course of 3 years we paid everything on time but had a heavy rotation of debt...until COVID. Beginning at Feb 2020 I lost all my real estate clients as the lenders were not giving them their loans. Some of them were under contract and still lost their funding, which in turn I lost my commissions. This caused me to get a couple months behind on my payments until June 1st where I paid off all of my debt with my home sale. $50,000 worth of debts. This has caused my credit score to plummet but it is slowly rising now. Of course I have proof of all this, on time payments for 4 years straight, no missed payments, until Feb 2020 with a big final pay off on all those rotating debts...again, approx $50k total.

I would greatly appreciate your advice and recommendations to my options now, professionals who can get me going, to help me get started with the cash I have available for startup even with a dipped credit (BAD) ranking.... What is needed for me other than hard cash right now? and what is needed to grab a 1031x from my sale? I would like to naturally put some cash down with a good loan on a property but am wondering if I have to wait until an actual credit score number has to be good on paper regardless of history and circumstances?

Thanks so much for your help!

[Moises R Cosme]

1. 1031 exchange:  are the proceeds in a qualified exchange account?  if the sale was in May, I believe you have to identify the qualifying property soon.  In order to complete the exchange the funds had to have been placed in escrow with a qualified third party.  Check out Michael Lantrip's books on Amazon, he's an investor, attorney & CPA - his books are really easy to read and they explain the 1031 exchange process.

2. Your credit:  I would NOT stress about this if I were you...  If you need to finance a flip, get hard money (a) hard money loans are collateral based, so they will lend on the asset not your personal credit and (b) hard money loans are typically structured as 120% finance deals, which will get you a good tax credit (I am NOT an accountant, but I use hard money for financing and have benefited from the tax treatment).  

Focus on rebuilding your business.  Any loan officer worth their weight will be able to access a rapid re score type of program, where you can prove out payoffs or pay downs and you can get a quick bump on your score.  The credit thing is weighing on you emotionally, I do NOT think it should... We all go through challenges, your credit score does not define you it is simply a financial metric that takes a snap shot in time.  Find a way to fix your business (try to delve into distressed real estate, work with some cash buyers and generate some commissions that way) and your credit will come back.