Coldwell Banker Residential Brokerage

5 Ways to Invest in Real Estate with Bad Credit

by Kelly And Forrest Real Estate 09/30/2019

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

Kelly And Forrest Real Estate

Teamwork! Beth and Megan have been working together for over eight years serving Charlotte through community service. Now they are combining their knowledge of the real estate market and construction to deliver a wide collection of services to our buyer and seller clients. Sometimes two brains are better than one.

Megan has enjoyed watching Charlotte grow over the past 22 years. She came to real estate after working in commercial interiors in Charlotte, Boston and the Bay Area. She consulted with interior designers and clients, created floor plans, and designed beautiful spaces. She can’t wait to apply this practical experience to helping you discover your perfect home in your perfect neighborhood. Megan has devoted much time to volunteering in the Charlotte Mecklenburg Schools and supports The Augustine Literacy Project. Megan is always up for an adventure. She can be found touring a castle, climbing a rock wall or going on an archaeological dig. She is an Ohio native who does not miss the lake effect snow. 

Beth entered real estate with a business background, but interior design passion. Her experience includes management, strategic planning and market analysis for a large corporate entity. In addition, Beth grew up as a military brat and is married to a US Navy veteran. Thus, she understands first hand the emotional and logistical challenges of relocating. She is an avid community servant, volunteering in schools and local shelters. Her entire family is committed to volunteering for 24 of Booty, a local cancer charity event. Her children attended both private and public schools so she is intimately familiar with the education system in Charlotte area. Because of her community involvement and connections, she is well suited to thoroughly navigate the Charlotte market. When not showing clients around Charlotte,she can be found exploring the NC mountain trails with her husband, kids and dog, Lily!