Private Lenders

[Samantha G.]

I'm trying to get back into real estate investing, buying, flipping and wholesaling, I have done some real estate about 5 yrs back where I rented and also sold about two of my personal homes. My credit is poor and I really don't have the finance to start. I would like some advice on how and where to start.

thanks everyone.

[Chad Carson]

I echo @James Wise that you should work on credit and down payments, and I agree with @Dawn Anastasi that you should read everything on this site likes it's your new business.

But I'd also recommend looking for a lease with an option to buy as your personal residence. You have to live somewhere, and you could possibly control the price of a decent house, at or below market rent, with a small down payment (option fee), while also building equity.

Here is an example:

Find a motivated landlord who is looking to rent a house for $1,000/mo. Let's say the the ARV = $140,000 and the house is structurally good but needs clean-up and minor cosmetics.

Offer to lease option for $1,000/month for 3 years. You could pay $1,000 upfront option consideration for an option to buy at $125,000 or lower (not too hard to negotiate). You offer to handle the first $100/mo in maintenance/repairs, and $500/mo of each rent payment is credited towards your purchase price. I'd also try to get a renewal of another 2-3 years for additional option consideration.

You could clean the place up, do some cosmetic fixes if needed, and then in 2-3 years, resell the property or refinance if you want to keep. After 2 years your strike price would be:

$125,000 = original option strike price

($1,000) = up front option consideration

($12,000) = monthly credit @ $500/mo x 24 months

$112,000 = new strike price

If you could patiently sell for $140,000 or more, you've got some good profit built in for 2 years of smart work paying the same rent you would anyway. Or if you refinance, you now have 20% equity, so you have just "saved" your down payment.

Just an idea while you work on your credit and learn other investment strategies.