Private lender or hard money lender

[Cesar Martinez]

Hi guys just joined today but I've been watching many YouTube videos from BiggerPockets I've been reaserching and reading a lot about Real Estate and investing my biggest concern is what are the chances of a lender lending a 50k+ loan to a 22 year old with not much credit history? What do you guys recommend  I do I feel I'm on a right spot. I'm in Chicago I've found really nice houses to rehab for around 20-30k Thank you

[George Despotopoulos]

Hi @Cesar Martinez

Welcome to the forums! It may seem overwhelming at first, but there's some great info and resources here, so make use of them as much as you can. 

It's great that you're able to invest at such a young age. Traditional bank lenders usually look at your debt to income ratio and credit history as a starting point. There are non-bank lenders who will qualify you based on the rental property's income (or if you're doing a fix & flip, the purchase price, the property value, and the after repair value). What they look at is called the debt service coverage ration, which basically is an analysis of the mortgage payments versus the property's income (measures as net income from the property divided by the loan payment). Most non-bank lender will have a net worth requirement and a minimum credit score, but they're usually a lot more relaxed than bank lenders. If your credit score is above 600 you should be able to obtain financing. 

If you're doing a rehab and then you'll rent it out once renos are done, usually you'll want to qualify for short term financing (6 months or 12 months), which can either be called a bridge loan (for buy/rehab/rent/refi projects) or a hard money loan and once you get a renter in place you refinance out of it into a longer term loan.