Newbie Climbing Mt. Everest - Am I Hopeless?

Question

Hey y’all! I am the definition of newbie. I’ve been interested in real estate for years but never got serious. I belong to the bad credit/no money group. I want to start off with buy and hold investing, but I’m worried about financing. I’ve had a few ideas on how to do some creative things to come up with down payments, but I don’t see any bank around financing me right now.

So I guess my ultimate question is should I concentrate solely on raising my credit score and getting back in the good graces BEFORE I start looking for deals? Am I wasting time looking at properties right now?

Patricia Steiner · Answer

In order to be taken serious as an investor, you'll need a credible credit score.  Learning to respect money, living within your means (it's really a sexy thing to do), and showing fiscal self-control are behaviors/commitments that extremely wealthy people employ.  I find that a lot of folks "wearing/driving their wealth" are actually "showing their debt."  (In Texas, they call this "all hat, no cattle").

Warren Buffet:  “The difference between successful people and really successful people is that really successful people say no to almost everything.”

Want better for yourself...get your financial house in order and be the real deal.

Marcus Auerbach · Answer

@William Kilburn I give you much credit for asking the question!!

Your gut instinct is correct, your current situation is probably the result of your low financial literacy. That's not your fault - you don't learn that in school and only a few of us have been fortunate enough to have been tought by our parents. I grew up with money anxiety and bad habits from my family. It took a while to un-learn these ideas. The great news is you are recogoizing it and you have just made the first step to learn and improve your financial literacy.

Be. Do. Have. You have to BEcome an investor (in your head) first, then DO what investors are doing every day, and then you will HAVE.

Your financial literacy is your foundation you are building on. A great book to start with is Rich Dad, Poor Dad by Robert Kyosaki. As you are working on yourself, you will see your credit score change and most likly your financial situation improve (in very small steps).

I think you should keep looking at deals, if that is what motivates you, but start by working on yourself first.

Saravanan Saravanan · Answer

@William Kilburn As a general thought improving credit score would help in different areas in future.

There may be lenders who might finance you when the deal is very good; that has lesser risk due to the value of the property.

You could potentially sell the property to another investor for a profit as a wholesaler.  Handful of these profit can help you for down; when lender requires 20% down or so.

Brian Egr · Answer

@William Kilburn Don't give up! There's a story in a book I read a while ago about a guy who bought a bunch of gold mining equipment and dug half way through a mountain, didn't find any gold and gave up and sold all the mining equipment. The guy he sold the equipment to dug 3 more feet into the mountain and found one of the biggest gold veins ever found.  - or something like that.

Anyway, the point of the story is don't give up on all that hard work because you could be just about to the point where the pay off is coming.

Also, if you don't have any money and bad credit the best thing to do would be find a good deal and bring it to someone who can fund it.  Instead of a wholesale fee tell them you want an equity share of the deal.

William Kilburn · Answer

@Teresa Buchanan I appreciate you chiming in. I’ve just recently discovered Dave Ramsey. I’m definitely going to study his stuff. Thanks again!

William Kilburn · Answer

@henri

@Henri Meli thank you. I appreciate the advice you’ve given me. I am working on educating myself on these things.

Henri Meli · Answer

@William Kilburn . Remember that you can walk and chew gum at the same time. Learning how to find deals is a long process. It doesn't happen overnight. And having an outstanding credit score will help you in many ways.

Here is what I would do, if I were in your shoes.

1. Have a clear plan on how to improve your score. And start executing on it intentionally.

2. Educate myself on the different real estate strategies and how to find deals.

3. Build a network of people who invest in real estate.

Do all these things very intentionally , meaning you write down the goals, execute on them consistently and measure your success/failure and improve. The key is really the consistency.

Teresa Buchanan · Answer

I love all the responses here. In addition, I would recommend reading Dave Ramsey's books on financial freedom. It defies what we do as investors because he condemns using any leverage. But as a starting point to becoming financially sound and learing how to budget and repair your credit it is a great starting point.

Partnering with someone who brings a different skill set to the table is an excellent idea too. Listen to podcasts, read, attend real estate meet ups. You'll get there.

William Kilburn · Answer

@Brian Eger. You’re so right brother. I appreciate you kicking in on this. I have looked at the idea of getting a partner who can fund my first few deals. One of my goals right now is to learn how to find the good deals. The ones people with the ability to find will find appetizing. Learning this and rebuilding my credit standing are my main two goals at this point.

William Kilburn · Answer

Thank y’all for taking the time to share your advice with me.

@Saravanan Saravanan - Thanks for giving me some hope there’s still a chance to get started without having stellar digits!

@Marcus Auerbach - Yes, financial literacy is partly to blame. When I got divorced several years ago it put a huge dent in my credit. I rebuilt as best as I could, with help from a very talented agent and credit repair group, and bought my house in 2016. That put a large hit and then the illiteracy kicked in. I just finished Rich Dad, Poor Dad and it surely opened my eyes to concepts I’ve never considered.

@Patricia Steiner - I am working now to get my numbers back up. We’ve got some issues that keep raising up that are really beyond my control. I’m hoping this all gets settled soon so I don’t have to keep dipping into credit cards  It’s a slow process, but it’s a process. Thank you for your insight.

Newbie Climbing Mt. Everest - Am I Hopeless?

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