My first property: Recent Chapter 7 bankruptcy on file

[Adrian C.]

Hi there,

I’m 34 years old, live in Florida, got divorced recently and have 1.5 year old twins, and have never owned property. Just recently I started listening to the bigger pockets podcasts as I was looking for inspiration and knowledge on how to start owning multiple properties to achieve financial freedoms, and I love them. 

I have been saving up some money for a few months now and my goal is to buy my first property next year (2020). I listen to bigger pockets and am now getting into the forums and blog posts for advice. I also have a mentor who currently owns over 100 properties. However my question or issue is the following: 

Due to the previous circumstances I did file a chapter 7 bankruptcy that was discharged July 2019. Can I still then pursue this venture? And if so how or what are my options?

[Tamara Deering]

@Adrian C.

To get funding either bank loans or hard money you will need to be one year out from your bankruptcy.  Wholesaling would be a good strategy to start earning money while working in the real estate field. 

My advice to you would be to spend the next year saving as much money as you can, listen to the Bigger Pockets Money podcast for tips and tricks and then buy your first property as a house hack or a live in flip. There are programs through FHA, Fannie Mae and Freddie Mac that will help you get into a home with as low as 3.5% down, VA and USDA have 0% down programs, and there are down payment assistance programs that will help you bridge the gap between what you have saved and what you need for a down payment.

Your first home should be owner-occupied because you can get in for a much lower interest rate, you will save money on living expenses - especially if you house hack, and if you live there for two years and fix it up while living there when you sell you can keep the profits tax free.  Mindy Jensen from the money podcast still does this as the backbone of her real estate investing strategy.  I did it too and that is how I was able to quit my job at 38, move across the country and start flipping houses full time.

Keep your goals in front of you and don't worry about the bankruptcy, it is meant as a way to help you start over, so look at it as the blessing in disguise that it is.