I am enjoying this board and learning form all the questions that people are posting, but I have some questions of my own and would appreciate your input.
I have been researching real estate investing (buying distressed properties, fixing and reselling) and so far I have gotten my Real Estate License. My husband and I are very handy and can do a lot of the work ourselves and we have enlisted the help of a friend of ours who has some construction background (additions, electrical, plumbing etc)
However my question is, while my husband and I have a FICO score of 580 & 600 and a 2 year old banckruptcy, would it be possible that a bank would give us an investment loan based on our past credit history. We have a lot of spendable cash to buy and repair properties, but I would like to go into this with as little of my own money as possible. I don’t care about the rate I can secure a loan for since I have no intentions on holding the property for more than a couple of months at the most.
Would it be wise to finance my own projects in the begining or until I can show a history of completed projects.
I am sorry this post is so long but I wanted to cover all bases so that you can understand my dilema in it’s etirety.
Secondly, if you are looking to finance your investments… alot of homes won’t be able to be financed conventionally due to the condition of the property. Since we like to find them in dire need of work(At least I do! Better deals that way) Most banks won’t loan on them. Hard Money Lenders will loan on them, and your credit will not be a major stumbling block there if you have a good deal signed up. Most will look at your credit scores… but loan mainly on the LTV of the home, the After repaired value that is. It will cost more mind you, my HML charges 5points and 14percent interest. This would help you get started though without using your funds.
Ideally when you get a little experience behind you, then you could seek out private lenders. They lend more on experience and the value of the property. From my experiences both HML and private lenders like to stay 70% or less of the After Repair Value of the home.
Also… you can bring in a financial partner to fund the deals.You find the deal, do all the legwork and he/she provides the money not only to buy the property but also for repairs & Soft costs (Closings, ads to resell ect ect)
Now there are many creative ways to get the money for these deals… one even being if the owner is very motivated, they may owner finance the home and take a big portion of their cash after you fix up and resell the home. This is more common than you would think. Especially if someone lives in another state, or was renting the home out and tenents drove them crazy, many different reasons.
There are so many creative ways to finance a property but hopefully this will give you a little bit to start with.