Can anyone tell me if they know of hard money lenders lending to someone who has less then perfect credit (below required fico score) with a guarantor! The max amount this person can “invest” is $5000. This person is currently retired military and has no desire to actually purchase real estate with me because they don’t want to have to mess with all the tax stuff at the end of the year. Thank you in advance for any info you can provide me!
Just to clarify, are you wanting this other individual to actually invest money, or are you just wanting to “borrow” their credit? or a combo of both?
First of all, thank you for your response. The individual is willing to give me $5000 but does not wish to be an investor due to tax reasons. I guess I am just wanting to borrow his credit! Is that possible with HML or Private lenders? Any information you can provide would be greatly appreciated.
Respectfully,
Tina Gwynne
So he is gifting you $5000, or is he loaning you $5000? Since he’s concerned about taxes, if he’s loaning you $5000 and you’re paying him interest, then he’s gonna have to deal with taxes. If you’re just wanting to borrow his credit scores (his FICO scores) and have him cosign on the loan, then that’s a different story.
If you own an LLC, then you could possibly add him as a non-member manager to borrow his credit to help you qualify for HM.
I think you need some more defintion on how you are wanting to use him to qualify for the loan.
He is giving not gifting and I am not paying him interest or anything. It is my father in law. He is not rich, he is simply looking out for the best interest of mine and his sons future! I guess I’m not sure what you mean by “defining” in more detail as to how I wish to use him. I am simply asking if it is possible for someine who has perfect credit to co-sign for a hard money loan. Of course I fully understand the most important part is the deal itself but if in fact it is appealing to a HML/Private lender would they consider allowing a gaurantor for an investor that does not have perfect credit.
The co-signer has absolutely zero interest in the investment itself, he does not want to profit from any deals and has no desire to aquire any properties for flipping, selling or renting.
He would be a guarantor only and his only gain would be the piece of mind in knowing that his only child would be on the path to financial freedom and one less thing to worry about as far as when he is no longer here. If he was a non member manager of an LLC, would that affect him at tax time? I am so sorry if I am not making sense but God bless you taking the time to try to help me with this question.
Respectfully,
Tina Gwynne
The real question is whether you have the intention of repaying him the $5K that you are receiving from him. If you plan to repay him, then its a loan, albiet a 0% interest loan. If you do not intend to repay him the $5K, then the money is a gift, and I’m not 100% sure how a HML will view the cash.
To answer your larger question, yes, someone with great credit (your father in law) can co-sign with you on the loan. Just make sure he understands that he is legally liable for the debt when he co-signs with you. I understand your position as I had to do the same thing, but I just added my wife as a non-manager member to the LLC (I believe I switched the verbage in my last post). You’d have to check with an accountant for the tax implications of adding him to the LLC as a silent partner, I’m not sure how it would affect him, especially if he never receives any income from the company, nor has any expenses, etc.
Seeing as how pretty much all HML have different lending requirements, a lot of this advice about the cosigner is going to depend on the lender themselves. If you have somene specific in mind I would just call them up and throw the questions out there, most of the time they’re more than happy to help.
I have not actually approached any HML’s/Private Money Lenders because I have been reviewing many, many websites and noticed the FICO score requirements. Knowing full well I did not meet them, I didn’t see the need to waste their time. The $5000 would be a gift, I understand the difference now.
I guess I will contact an HML directly and see what I can find out for sure. Again, I thank you so much for your patience and information, you have been extremely helpful.
Respectfully,