How to Invest in Real Estate with Bad Credit

by Lindsey Sampier Baker 05/05/2019

A good credit score is essential for anyone who intends to buy a house. It is difficult and almost impossible to buy a home if your credit score is far from good. Future home buyers should note that the majority of lenders won’t grant you a loan if your credit score is not up to 620. Some lenders may only consider applicants whose credit score is above 700 while others may peg their credit score requirement at 720 or 740. 

When it comes to real estate investing, there is flexibility. You can get a traditional loan even if your credit score is below the requirement. There are lots of other real estate investment options that you can consider if your credit score is sub-par. Here are some ways to invest in real estate with bad credit:

Go for a hard money loan 

 One of the options you can consider if you have a low credit score is to get a loan from a hard money lender. Hard money lenders are private individuals that issue out short term loan. You must be aware that the primary interest of this lender is to invest. So, they are not going to fund an individual who wants to buy a home to stay. 

Consider a private lender 

Another funding source to consider when you have bad credit is a private money lender. Anyone that is looking for a return on their investment can decide to give out a loan to people. Private money can come from anybody – business partner, relatives, friends, and acquaintances.

Get a partner You can decide to strike a partnership deal with someone that has a good credit score. The partnership should be mutual, and your partner could be a colleague at work, neighbor, friend, or relative.

Consider seller financing 

This strategy is ideal for properties that are wholly owned and paid off. Seller financing could be an excellent option if there is no problem with cash flow and the seller does ‘quick money' from the sale of their property.The seller becomes the bank when they finance a deal. Meaning that you have a mortgage with the person selling the house. Based on your agreement, the seller permits you to pay monthly until you clear off your debt

Look into wholesaling 

Wholesaling is another excellent way of investing in real estate when your credit score is low. The steps involved in wholesaling are:

  1. Finding a seller
  2. Look for another buyer to stand in your place 
  3. The buyer assumes all the terms and condition stated in your purchase agreement
  4. You earn an ‘assignment fee’ for your role

Talk to a local real estate agent to know what options you have in your real estate market to take advantage of regardless of your bad credit.

About the Author
Author

Lindsey Sampier Baker

Lindsey has been selling real estate for over 14 years and works in her family agency with over 40 years of real estate experience! It’s in her blood. Her expertise is in new construction, she knows the ins and outs of the building processing has worked closely with superintendents and trades. Lindsey has great experience with land deals, and resale homes as well.

Lindsey’s passion is to hear people, what they truly need and work her hardest to deliver on these needs. Your home is where you share you most important moments and she’s going to be sure the journey to get you to your new home or sell your existing is a wonderful one.

Lindsey has 5 beautiful children, a hugely supportive husband and a lively farmette filled with all sorts of animals, lots of laughter and hard work. She loves living in Erie and believes in a true sense of community and making things beautiful.

She is so excited to get to know you, hear your heart and help you with your real estate needs!!!