Ok…I understand! You don’t have any credit whatsoever, or you got a few credit cards early and destroyed your credit. That’s fine…you can still make some serious wealth through real estate. Put your money & credit away and start using your head…
For right now, getting a mortgage is totally out of the question.
But, here’s what you can do:
1. Arrange creative financing with your seller (purchase house subject to the existing financing, Lease Option)
2. Wholesale a few properties first to give you some cash reserves (Find good deals and sell them to other real estate investors for $5,000 – $20,000)
3. Find properties in need of renovation- buy the properties with a hard money loan – use funds to repair — resell for a profit or refinance after repairs are complete and pay off hard money loan.
These are just a few of the things that you can do…don’t let your mind limit you because you’re “young” or you are a “student” or you just don’t have credit.
Now that the real estate market has switched to a “buyer’s market”, there is a lot more chatter about grabbing some favorable terms, and lease options seem to be the new buzz word.
Here’s the deal with lease options — Most of the time, those “LEASE OPTION” or “RENT TO OWN” signs are other real estate investors that are trying to sell their properties to an end user for a premium because they know that the potential buyer is going to have challenged credit. Now, there’s nothing wrong with that….BUT….as an investor, you don’t want those deals.
You need to focus on marketing & searching for motivated sellers (someone that is behind on payments, needs to relocate fast, bought a new house and can’t sell the other one), etc…and THEN see if taking over their payments solves their problem. A good portion of the time the motivated seller will be in a bad situation and can legitimately only accept an all cash offer. That’s fine, in those situations, lock it up under a contract at a good price and wholesale it to other investors (or maybe your parents would be interested). As you start going through the motions more and more….you’ll find people that don’t actually need cash, and those are the ones where you’ll take over their mortgage or do a lease / option.
I personally prefer buying the property Subject To (have them sign a deed over to you) and you just continue their mortgage, because you have much more control over the deal. But make sure that you do your research on these topic before jumping right into it. There’s a guy on ebay that sells a pretty decent “Subject To” course for a few dollars..:) Pretty good basic stuff, for a low price…
In my area (South FL) good opportunities for these kinds of deals would be:
a. Speculators that are sitting on 6 houses that won’t sell
b. Builders that are in a pickle
c. Someone that has inherited a property with a mortgage
e. Someone that must move very quickly or relocate out of the area
f. Someone that has purchased another house – moved out and can’t sell their original house because the market has slowed down
g. An individual that bought very cheaply and doesn’t want the tax implication (make sure that you’re not paying too much)