Investing in real estate is one of the best things that you can do to improve your financial portfolio, set up a passive income for yourself, and create some automatic wealth. The problem is that, if you go the traditional route, you may find that you are up to a dead end.
Traditional banks and loan companies almost always will check your credit rating in making the decision on whether to loan to you. If you have always wanted to invest in real estate property but don’t have the good credit rating to do it, there are options that you might not know about. Here are 5 ways to buy an investment property with bad credit.
5 Ways to Buy Investment Property with Bad Credit for the Calculating Investor
If you are looking for options to becoming an investor in real estate but thought that you could not do it because of your negative credit rating, there are some options you should consider. Things look good for real estate investors in the future, especially since the recent political changes. The White House ushered in a real estate mogul and entrepreneur who wants to empower people to borrow money and invest in their futures.
Below are 5 ways to buy investment property with bad credit that you’ll want to look into if you want to invest in real estate.
- Deal with the seller directly. When you deal directly with the seller of the property rather than going through a middleman such as a real estate company in New York, you increase your chances of cutting a better deal for yourself. The individual seller may be in a hurry to sell because they have run into a financial situation that requires them to sell quickly. If you get to know the seller’s goals and explain your situation about your credit, you might be surprised to find that they will settle for a “cash only” settlement offer, negating the need to run your credit history.
- Work on ways to improve your credit rating before negotiating an offer. If you are planning to invest in real estate for the long term, it will be to your advantage to eventually clean up your credit rating. Start now to clean up your credit score by looking at where you are today. Tools such as CreditWise, owned by Capital Bank are a great place to start. Alternately, you can also get a free copy of your credit report from any of the three most important credit rating bureaus. Once you know what your score is, you can run some simulations to find out what would best help your credit score. Paying off old debt, making all payments on time, and obtaining new credit are all positive ways that you can improve your rating.
- Put up collateral. If you have something of value that you can put up for collateral, you may be able to sweeten the deal for the seller and make your offer more attractive. First make sure it’s a good deal that will be fair to both you and the property owner, then offer something of value as collateral. This takes an unsecured business deal and makes it a secure deal for the seller and they will be more likely to deal with you.
- Sell something for a larger down payment. If you have something that will get you some immediate funding, you can secure some cash to make a larger down payment to the seller. This will impress them when you offer them more cash than the real estate company or another buyer can, and you may win the deal by this one action. You do need to do your homework, though, to try and find out how much your competitors are offering so you can beat their deal.
- Get a bad credit property loan. If you don’t have any other options, consider getting a bad credit property loan. These loans are available to people in NY who have less than perfect (or even poor credit) but who want the opportunity to own property. The rates for these types of loans vary so check it out carefully and compare deals in New York.
Where there’s a will, there’s a way!
When it comes down to it, you can do anything you want to if you set your mind to it. If you want to become a real estate investor, there are more than 5 ways to buy investment property. So, use these 5 ways to buy investment property with bad credit for the calculating investor and let us know how it goes.