Buying an Investment Property With Bad Credit
Believe it or not buying a house with bad credit is possible. There are small private money investors and mortgage companies that want to secure their money and make a profit with real estate. Not from purchasing real estate themselves but putting up the money for a person seeking a loan when the right property is a “no brainer”! All they want to know is if the house or you have enough income to make the monthly payments on time.
So what do I mean by that? If you bought a 4 family house that each apartment could rent for $1200, that is $4800 in monthly rent collected. If you financed that home with monthly payments of $3000, you pretty much covered the rent with $1800 to spare. The money investor is happy because he’s making money in the form of interest off each monthly payment you make. That’s just one example of when buying real estate makes sense to a private lender or small mortgage company. With the housing market these days, there are many deals out there that suit the bill.
Credit is important but it isn’t all a bank or mortgage company is interested in. You can even qualify for 100% financing. Bring up all your positive attributes and get the mortgage company to see that you are still a good risk even though you have had some financial difficulties in the past.
One thing you can do to make buying a house with bad credit much easier is to come up with a down payment. Your mortgage company can usually work with bad credit issues if you can put down some money on your loan. They like to know you have some skin in the game! With a person that has money of their own to lose, they will more than likely work hard to keep the home and meet the monthly bills. A good average down payment should range anywhere from 5-20%. Save the money if you can, get a personal loan or look for other investors, to purchase the house with you.
But, let’s say you don’t have money for a down payment. Is it still possible? Through the years, I’ve made connections with different types of mortgage brokers that specialize in different areas, some for rental units, some for rehab loans, and even some for simultaneous closing or what you call a double closing. It’s important to make all the connections you can because you never know what type of property you’ll stumble upon. In any case, with each type of funding, if you don’t have a down payment yourself, you should bring on partners. A partner is the best route to go if you are absolutely broke with bad credit. A partner and the deal itself will allow you to purchase and or invest in real estate. You will have to do most if not all the work, but in the end, it will be worth it. After a few deals, you will have your own money to finance properties.
I encourage you to search Craigslist, newspaper ads, Yahoo or Google investment groups and forums online and physical real estate investment groups in your area. There is a network or investors out there that you need to tap into to make your real estate investing dreams a reality.