First Time MFH Investor, below 600 credit

[Alex Boots]

Hello,

I've been studying content on MFH investing for about a year and I'm done waiting and ready to take the dive.  I have friends/family who have some considerable cash and I won't have problems finding equity. The question remains is do I start above 4 units or not. Also, I still have a lot to learn on how to structure the equity partners into the deal, doing preferred returns, splitting returns above it, structuring how profits are disbursed on the exit, etc.

Here's my main concern - I have credit below 600 still from destroying my credit score with reckless consumer debt spending in my 20's.  I've been enrolled in a debt settlement program and have been settling debt for 2 years now, but I still have a ways to go.  I have a couple collections on there, lots of missed payments, etc, in 2019 before they all went to collections (about 13 different consumer credit lines with different banks). 

I've had w2's for the past year and half and will make about $100K-$150k from my job this year, so my income isn't really impressive either. 

With both DSCR loans and conventional financing, it just doesn't appear I can cirumvent the low credit score.

What are my workarounds? Do lenders pull the credit scores of ALL the equity partners (investors) in the deal? Do they just look at mine? Do I leave mine off entirely, and if so, how would I do that and still have any equity in the deal? 

How do I solve this so I stop WAITING to buy real estate but buy and then WAIT, pay off all my debt, increase my net worth for real.  

[Jason Wray]

Alex,

First off you need to examine your debt settlement program that should never take more than 12 months to recreate a Fico above 620 or higher. I am not a big fan of any credit repair or debt settlement services as they can delay your score improvement. You do not need a company to help you settle debt you can do it yourself. Negotiating the debts 40-45 cents on the dollar and also trying to settle with a "pay for delete" account.

You also have to look at your states statute of limitations on your derogatory collections time frame to be on credit. Aside from that if you are buying a primary home and you are a Military Veteran you only need a 580 Fico score. You can also qualify for an FHA loan at a 600 credit score as long as you do not currently have any accounts on credit under "Customer Dispute". You can have some collections but they have to be under $2000.

You really need to talk to a Banker or Seasoned Loan Officer to have them review a copy of your credit report. A Banker/Loan officer can also run a "What is simulator" or "Way Finder" to try and see what more can be done without having to pay a debt settlement company.

You can always buy a 2-4 unit as a primary using FHA or VA if you qualify then rent out the other units.