Real Estate Using No Money Down and Bad Credit

By: Mike Dodd

First let just say that you can get into real estate even with poor or bad credit and no money.

You should always start by "learning the deal". In other words, find out exactly why the seller of the property or building is ready to find a buyer at this time. Remember, you frequently hear about people who made their fortunes investing in the stock market, but you also hear about investors who lost their shirts. You hardly ever hear about real-estate investors who go bankrupt. It does happen, but not very often. Where there is property involved, there is always "worth" there. Many times creative financing can be the way into the property.

1. Be ready with the buyer first. You can, many times, have a buyer ready to purchase the property from you before you sign the closing to obtain it. This should always be considered because after all "time is money".

2. Find a partner for the real estate deal. Look for a 50/50 partner or a partner of another percentage. That can help.

3. You can get the seller to "carry" the note. This is a favorite of any newbies to the real estate world.

Example: Let's say you find house that has a small balance on the first mortgage. Let's say the house is worth a $100,000; the balance on the first mortgage is $30,000. If you wanted to buy this house for $80,000, you could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (Appraised Market Value), which is $65,000, and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash and $125 income on the $15,000 loan that they carried at 10% interest only for 5 years.

4. You can seek out a "hard money" lender. Hard money is an equity loan made at approximately 65% Loan to Value Ratio based on the equity of the property only.

5. You can also combine the last two mentioned creative financing deals. Get the seller to simply carry the second and refinance the first. This gives the seller some money and gives you some control of the property. There are a large variety of financing options available using this system, but it works great.

6 There is also something called a "sandwich lease option" which can vary greatly from deal to deal. It simply states that you lease the property with a option to buy and an option to sell is included in the contract for the property. Then it is just a matter of either selling the property or "sub-leasing" the property or building.

7. Another method of financing is "Sub-prime Financing". There are a lot of lenders that will finance out 70% even with poor credit and will not verify money down.

8. This last option can be used and let the owner carry the remainder of the balance. This has several variations, also.

Most people aren't willing to take the risk that real-estate investing involves. Fortunately, these are the same people that will make you money by renting or buying from you. The people who invested in real estate years ago are living a very comfortable lifestyle now.

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