800 fico, Under 45% utilization. Where to start Investing?

Question

Hello BP,

With good credit and job, where do I start. I have been looking for wholesale deals, its taking a while. Im sure it will come. However, we are looking to rehab and sell or hold. Eventually we want to go multi unit.

Issues:

Hard Money is expensive but useful. However the issue is the 20% down payment at the same time you need money to begin the rehabs. Where does that money come from

Portfolio Lending

Do we use our credit to pickup rental properties with tenants in them under portfolio loan?

Aquire a local restoration company then use that to leverage more deals partnering with investors and contractors?

Do we use inquiries to get credit cards and use the cards for down payments? Whats the best route to get the cash needed for down payments on the loans? Other than saving your own money for years.lol

Best way to get the most out of my good credit while investing on real estate I guess is what im asking?

We are willing to partner with a mentor on our first deal.

Look foward to some insight. Thanks

Leland Barrow · Answer

If I understand correctly you want to buy properties with a 100% financing to rehab or hold because you have good credit. Theoretically you can do that but I would warn that you run the odds of no longer having good credit. I have purchased properties with 100% financing but they were sub 3% rates and more traditional mortgages. I also came with nothing out of pocket so I could bank away 6 months of reserves. Financing with a combination of HML and Credit Cards seems like a terrible idea.

You can buy properties with a low down payment of 3.5-5% on a traditional type of mortgage. They do have residency requirements for these loans. You can use house hacking as an investment strategy. Be prepared to pay PMI.

You can buy from 4-10 properties with traditional types of mortgages with 20-25% down.

You can buy more properties after the typical 10 with portfolio loans that have seasoned properties in a portfolio. Lenders will require that you have 20-25% down invested in the deals. The advantage is these typically look at the deal as much as the individual.

You can get a commercial loan for investment purposes. Commercial loans primarily evaluate the deal and the track record of the individual(s) managing the deal. Lenders also require you to have your own money involved.

You can take out a line of credit against an asset and reinvest that into a new investment.

You can buy properties with HML for a short period of time and the HML may pay part of the acquisition and rehab costs but they will want you to have your own money invested in the deal also. This a flip type of scenario with the idea of getting and out before carrying costs eat up your profits.

You can buy properties with owner financing or owner carry back but these are more difficult to find and the purchase price is typically inflated above market value.

Most people start by borrowing money from friends or family at zero or little interest.

A great Credit score without capital is worth far less than capital without a great credit score. If you want to invest find some partners or save some money.

Quasar Alexander · Answer

Thanks. This is great info. I will look up house hacking. I dont own an asset out right at moment to put up for loan.

May need a cash partner I see.

Geesh what does good credit get you nkw days.

I also heard of funding for flipping but they charge so much. $7000 to get 50,000. Thats a no no

I guess if someone sees this and want to invest with me then get with me on msg. I did flipping for my Uncle in 2006 in Texas. So much has changed.

Michael Lee · Answer

Hello and welcome to BP!  Ultimatly, it is be where the economy is diverse and the , it's your goals that matterthe most.  There is short term and long term deals.  Just go where the economy is diverse and the population is growing.  I would tend to br somewhere in the middle or south of the country.  Why?  The prices seem to be cheaper so that's where most people go.  That and immigration tends to benefit those parts of the country.  Wholesaling mixed with Fix and Flip is a nice short term investment.  Buy and hold tends to be more long term.  The inventory of real estate improvement is harder to find now-a-days requires more work.  Sellers are better reacting to cash buyers most because they cab typically close faster.

It's all about hustle now-a-days.  Always do the math analysis and try to look at the subject property before you make an offer or at least have a clause in the sales contract that allows you the time (usually 15 days) to look at the property and possibly walk away without much of a penalty.  You need a good local Team that will react to your calls.  The typical main Team members are Attornies, real estate Agents, CPA (or accountants) , Inspectors, General Contractors, and Handymen.

I am 59 years old and I found BP about 11 months ago and I am still deciding what to do.  I also went to college, which is not mandatory, and I got a business degree that emphasized real estate.  Since I was in Texas and planned on staying there, I found out if I was qualified to get a broker license, so I took the test and I got my license.  I never did that full time.  I kept that license for about 30 years.  I closed a few deals for other people.  Regardless of what I had I felt more comfortable with the construction business.  I have been in the construction business since I  was 17 years old including those college years.  If you think that I can help you please contact me through BP at any time.  Good luck to you Both!

Kelli Huang · Answer

I am currently on the same boat. I want to start investing but clueless how to start. I can get $10-30k cash but with rehab cost, reserves for tax and insurance, seems like I really have to find creative ways to finance either the house or the rehab. Unless I can buy a house and rehab for $10-30k, which will be hard to come by in metro Atlanta in a decent neighborhood. You didn't mention what criteria of homes you are looking for. Like the first reply said, you can house hack if it's your primary residance. You can look into FHA 203 K, it lets you buy and rehab using one loan. I wish I would use 203k to buy a multi-family as my first house.

800 fico, Under 45% utilization. Where to start Investing?

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