Can You Invest in Real Estate with Bad Credit?

by Silver Spoon Properties & Lending 09/29/2019

A good credit score is essential for anyone who intends to buy a house. It is difficult and almost impossible to buy a home if your credit score is far from good. Future home buyers should note that the majority of lenders won’t grant you a loan if your credit score is not up to 620. Some lenders may only consider applicants whose credit score is above 700 while others may peg their credit score requirement at 720 or 740. 

When it comes to real estate investing, there is flexibility. You can get a traditional loan even if your credit score is below the requirement. There are lots of other real estate investment options that you can consider if your credit score is sub-par. Here are some ways to invest in real estate with bad credit:

Go for a hard money loan 

 One of the options you can consider if you have a low credit score is to get a loan from a hard money lender. Hard money lenders are private individuals that issue out short term loan. You must be aware that the primary interest of this lender is to invest. So, they are not going to fund an individual who wants to buy a home to stay. 

Consider a private lender 

Another funding source to consider when you have bad credit is a private money lender. Anyone that is looking for a return on their investment can decide to give out a loan to people. Private money can come from anybody – business partner, relatives, friends, and acquaintances.

Get a partner You can decide to strike a partnership deal with someone that has a good credit score. The partnership should be mutual, and your partner could be a colleague at work, neighbor, friend, or relative.

Consider seller financing 

This strategy is ideal for properties that are wholly owned and paid off. Seller financing could be an excellent option if there is no problem with cash flow and the seller does ‘quick money' from the sale of their property.The seller becomes the bank when they finance a deal. Meaning that you have a mortgage with the person selling the house. Based on your agreement, the seller permits you to pay monthly until you clear off your debt

Look into wholesaling 

Wholesaling is another excellent way of investing in real estate when your credit score is low. The steps involved in wholesaling are:

  1. Finding a seller
  2. Look for another buyer to stand in your place 
  3. The buyer assumes all the terms and condition stated in your purchase agreement
  4. You earn an ‘assignment fee’ for your role

Talk to a local real estate agent to know what options you have in your real estate market to take advantage of regardless of your bad credit.

About the Author
Author

Silver Spoon Properties & Lending

Carlo Honanian is the Broker and President of Silver Spoon Investments. Carlo started off his career as a Vice President with Chase Bank in the early 1990s with extensive experience in residential and commercial loans, banking, compliance, human resources, sales, clients services,and branch management. Carlo’s real estate career was added to his portfolio of expertise and services in 1999 and has continued on till today. Carlo takes great pride in listening to his client’s needs and providing outstanding service with integrity. Getting training in extensive management skills and superior customer service by one of the top banking institutions around, Carlo has carried the same mentality to the field of real estate and financing in creating and operating Silver Spoon Properties and Lending. Carlo’s vision for creating this company was simple, to be a one-stop-shop for clients to handle all of their real estate and lending needs. Carlo’s extensive experience in loan origination, real estate sales, bank management,and clients services is a distinct advantage to his clients. With the broad knowledge and understanding of residential and commercial real estate and lending, added with a tremendous focus on providing superior customer service and experience is what you can expect with Carlo and Silver Spoon Properties and Lending.

Silver Spoon Properties and Lending is also a Certified Short Sale & Foreclosure Brokerage (SFR) through the National Association of Realtors. Take advantage of our experience and training in dealing with the Short Sale and Foreclosure market today. Please call us today to discuss buying, selling, or financing your property or for a free consultation to discuss your individual scenario. We also offer property management and leasing services. Whether you are a first time home buyer or a seasoned property investor, we can cater to you specific needs. Consider us your one stop shop for residential and commercial real estate sales, loans and financing options like SBA, Commercial, Hard Money, and Residential Mortgages.