bad credit

i just had a friend loan me 60k and told me to pay him back in a year (saved my life basically) now im interested in buying multi fam properties…my personal credit is horrible and owe ALOT because of medical bills…i plan of fixing my credit later when i make more money…i figure finding a JV partner with good credit or business credit is the best option? and where?

Bad credit has nothing to do with money. It is about being organized. Being organized is not trivial, it is crucial to the business that we are in. Real estate courses are sold to people with no cash no credit but that is to sell books. Since there are more people with no cash and no credit then the market for potential sells is larger than the market for people with great credit making over $100k/year. That marketing has no bearing on your potential for success as a real estate investor. You need credit. For example the typical American only has 4 credit cards. So let’s say you have 5 credit cards. If you are not organized enough to pay 5 credit cards on time every month how are you going to handle it when you have 20 mortgages. You have to get rent in from 20 people drawn on 8 different banks coming in and clearing at different times. You have to make sure they clear so you don’t bounce checks and still get the mortgages paid on time EVERY month. That is not trivial. You have to organize yourself, first. Credit is not bad or good, it is a number. That number is generated by an algorithm. It is based on how you pay your debt. If you get organized and pay your debts your credit score will take care of itself.

Debt payments are like meals. You don’t miss meals do you? Then don’t miss debt payments. What I would do is go to the websites of all my creditors. Set it up to make automatic payments for each debt for the minimum payment every month. What that does is automates the payments so that you never miss a payment. If the minimum payment is $25 then that gets paid automatically, but if you really want to pay $100. Then you can log on later in the month and make an additional payment of $75. But you never miss a payment.

hey bluemoon thanks for the time to share but…i should probably redo my question…i have funds and im looking for a potential partners to team up and buy multi fams…i understand my credit situation

I think the point that Bluemoon06 is trying to make is, Why would someone want to partner up with you when you have a horrible track record of money handling and no real estate experience? Especially someone that you do not know.

You need to get your own house in order before risking what you have and potentially making it worse. Remove the personal feelings for a moment and ask yourself if you would risk partnering with this type of individual if you were in the investors shoes.

mdhaas…
excellent post/point…

I’m not in any way affiliated with the “Warrior Forum” by I hang out there quite a bit and know that they have a “Joint Venture” area of their forum. You might check there.

Credit is important in business because it is the primary factor in determining your credibility. The primary premise to remember is that people don’t change. If a guy chases chicks and spends all his money in bars now when you marry him he will chase chicks and spend all his money in bars after you marry him. He doesn’t have credibility until he shows a history of not doing that. It is, however, ok to marry a guy that used to chase chicks and spend all his money in bars. He has gotten his credibility back. In business credit is equal to your credibility. People who don’t know you but they have to try to figure out how much credibility you have will use your credit score to figure that out. Money is not a function of credibility it is a function of math. You make more than you spend and you save the difference. Credit is a function of behavior. It indicates how you behave with other people’s money. If I am going to loan you money or work with you in a partnership how you pay your bills is an indication of how you are going to act with me as your partner. The money you have borrowed is not your money. It is your creditor’s money and your credit score shows what kind of steward you are of your creditor’s money. It is an indicator of how you act when you have been given the chance to oversee something that is not yours.

There are four types of people in this business

  1. money and good credit – this person makes more than he spends and pays his bills on time
  2. no money good credit – this person understands that the money in his pocket is not his and he is a good steward of other people’s money. He needs to earn more money or spend less (they usually really need to spend less)
  3. money bad credit – This person does not see himself as a steward of his creditor’s money. He sees all the money in his pocket as his money. This is no different than stealing or embezzling (loose definition). Or this person is disorganized and can’t get all of them paid.
  4. no money bad credit – this person doesn’t make enough money compared to how much he spends and steals to make up the difference.

Realize that none of these people are bad. They just have credibility or not. I don’t do business as a gamble. I always know that every deal I do is going to be successful before I do the deal. I know how each of the parts of the deal are going to behave before I do the deal. The house will sell at $100k because all the houses there sell for $100k. I know the house will rent for $1000/month because all the houses there rent for $1000/month. My partners will pay the bills because they always pay their bills.

Credit is not a toy. It is a business tool. Don’t cosign for some kid to buy a car, don’t finance a big screen TV unless you have the money to pay it off. Pay your bills on time everytime even if it means you eat loose meat and potatoes for a week.

To apply for bad credit loans, even if taken by many factors, such as payments of poor increased from bankruptcy, captured, CCJ and many others, you are welcome. loan providers "do not distinguish the applicant if they have a bad credit history or excellent credit history. Most people can take advantage of quick financing, no worries.

jameshyden01,
Your post was completely unintelligible to me even though I read it several times. Maybe you need to take more time and write shorter sentences. What were you trying to say?

psalm23,
You say you have bad credit, medical bills, and a personal debt of $60,000 due in one year. Now you want to buy real estate using a potential partner’s GOOD credit. Were you planning to use the $60,000 or is it already spent?

I say you need to take care of your personal financial problems first. Real estate for a new investor is unlikely to generate $60,000 profit in one year to pay off your friend. It is tough to have medical bills.

What about cutting your living expenses, selling unnecessary stuff, and getting a second job? Dig yourself out of your present hole BEFORE you complicate your life more.

Good luck and let us know what you decide is your best course.

Furnishedowner

Well, I would move with caution about using the $60k in buying properties right now, since you have a friendship involved and the market is unstable (it could take longer than a year for you to being able to repay back the loan.) I would use the money to flip properties: buy a property, which you have a buyer lined up for, so you can recycle the money quickly and build up your reserve. Once you have doubled your money (at $120k for example), you can become a little more aggressive, like going into JV partnerships. Real Estate is a lucrative game, but it must be taken slowly. It is easy to get in trouble along the way if you don’t move with caution and take calculated risks.

BAD CREDIT HAS NOTHING TO DO WITH MONEY. IT IS ABOUT BEING ORGANIZED.

That, in my opinion, is the quote of the week. From Bluemoon06.

Where are you on the “organized” scale? How is that affecting your credit?

That quote is a gold nugget.

Furnishedowner

thanks guys…i actually found a partner and im now fixing and flipping and making good money…i realize the point alot of you were trying to make…but when it comes to making money i realized that credit doesnt matter…either does money…just relationships…i was able to borrow a little more money without any use of my own just by talking to a guy at my investors club and now i make him and me money :cool