My observation for/about beginners

I’m hardly what you would call a seasoned investor, rehabber, flipper or anything else in this business. My background is strictly on the mortgage side of things but i’ve been learning here and there about the in’s and outs of the REI side of things for almost 8 months now.

But what concerns me is the numbers of people who are trying to jump into the real estate rehab business with almost no assets and pretty poor credit. Just browsing the site, the number of threads asking about HML’s and loans for poor credit and/or no reserves amazes me. Now don’t get me wrong, i’m not making judgement calls on anyone who’s trying to better their financial situation by trying to rehab homes and/or acquire property but that’s just it. These are HOMES.

You would think that a person would automatically say to themselves i’m going to need both CAPITAL & CREDIT if my new business of choice is going to be real estate. Buying a home, even a cheap home is highly leveraged purchase, possibly the highest levered purchase you’ll ever make and i just don’t see why credit and capital are the last things on potential investors minds.

Maybe it’s all the hucksters on late night infomercials, maybe it’s the flip this/that house phoenomenon i dunno.

But i just wish that for the sake of you guys financial futures that you would at least try having a financial cushion in place for your new business, yourself personal affiars as well as be diligent about trying to improve your credit to the point where you can at least qualify for a basic HML property that fits all of the lender’s LTV/ARV requirements. Most HML’s are no where near as restrictive as a traditional lender but they aren’t free ATM’s either.

I understand in America it’s all about getting the money right NOW but is it too much to ask that while you are acquiring your background education on this business that you attempt to get the two things that you’ll need the most in the business in order as well. Things can and will go wrong in this business and you have to be prepaired.

Trust me, that once in a lifetime property is more than likely not gonna come across your desk in the first 6 months of your adventure into this business, which could be the time spent getting your affairs in order, and if it does i wish you all the best in getting the deal done with zero reserves and credit in the 440’s. Where there’s a will there’s a way right? As i’m sure there’s a seasoned pro/mentor in your area who’ll be willing to do the deal with you and share a portion of profits… No you didn’t make the 50K in 2 weeks like you thought you would but 5K and a wealth of experience never hurt anyone.

I say all of that to say this. Get YOUR house in order, get your REI education in order, find a mentor and hit the ground running. These homes aren’t going anywhere, don’t risk financial ruin jumping the gun when you aren’t ready.

Peace and blessings to everyone on their respective paths to financial freedom.

end of slight rant

Thank you for taking the time to write your comment about new comers to flipping homes. I am one of those new people who would like to grow financially by rehabing and flipping a home. My credit scores are 515, 512, and 529. my income is 5290.32 per month and I have no assests. I am in the process of building new positive credit and I have found a new creative way to raise money for reserves. I know now after reading your advise, That I am doing it the right way. I did try to get a loan but got rejected several times so I had to regroup, if I really wanted to achieve my goal.

Thank You

Actually, that is a great observation and truth. As I embark upon REI I actually have trouble finding any info or a mentor for someone like me who has good credit and capital saved as well as equity. Every seminar/kit/club seems to be targeted to the “no money down” “poor credit Ok” etc. crowd and are truly more interested in only getting money “selling” their method. I find that when I talk to lenders they aren’t very interested in getting my business because they can’t make money off of me by working to get me approved, they won’t turn my business away, but once I go over my financials they just say yeah you should have no problem and don’t want to have to compete with anyone. I am taking my time and waiting for the right deal.