Hi- I Have recently started to get into reading about REI. I have some basic questions that may seem obvious to some, but direct answers would be very helpful to figure out if this is something that both my husband and I can do.
WE are looking to do this under a business name. It would be a newly started company. Both of our credit is not very good, not horrible but needs some improvement. We dont have much of a savings. Getting loans under a new business for real estate invesments, how difficult would that be?
-Would it be better to do a “contract flip” to build some money first?
What types of lenders are available for either sub-par credit loans (under our name) or for a business(new)?
Any direction or advice would be greatly appreciated!
Some banks won’t lend to business entities at all, so that will knock out some of them. Getting a loan to the business will almost definitely require you to personally guarantee the loan. The personal guarantee will bring your bad credit into the situation. Being able to show money in reserves (by building your savings) would help, but getting your own credit in check will be better. That will take time.
You can check around with some banks to see what their requirements are. Expect in general for places to require anywhere between 15-30% down if they even do loans on investment properties at all.
If you don’t want everyone hitting your credit, why not go to www.annualcreditreport.com and pull your own credit report so you can just show the banks? If you come to an agreement on a deal with a bank, they’ll probably still want to pull your credit, but at least you won’t have 10 different places pulling it. There’s a timeline where you can have so many places pull your credit over a month or so and it only counts as one hit because you’re “shopping” for a loan, but why take chances? I’d just provide my own up to date report. It’s free. One per reporting agency per year.
Potential lenders want to see your FICO scores because their qualifying software requires credit scores. Some lender’s qualification software won’t accept a credit score unless they pull your credit themselves.
Annualcreditreport.com does not provide a credit score with the free credit report. There is a cost for the credit score although the credit report itself is free.