Yes, You Can Buy Foreclosures With Lousy Credit
My personal favorite place to get cash for real estate deals is a through a hard money lender. For those of you who don’t know what a hard money lender is, let me explain. Pay close attention to details, because there are only a few sources for hard money loans available today.
A hard money real estate lender is a certain type of lender that loans on the future equity of the house after repaired value. Unlike conventional lenders, these lenders don’t care about what the house is worth at the present time. They don’t even want to know; all they care about is what the house is going to be worth after it is fixed up and ready to sell.
Take a look at some important facts on how hard moneylenders work:
1. They loan on future equity, not what the house is worth.
2. They can close in as little as two weeks.
3. You will not go through nearly as much red tape than if you went through a conventional lender.
4. They give you the money to fix it up in a draw-type system. (If you don’t know what that is, just follow the example below; it will explain everything to you.)
5. Hard money loans are short-term loans; generally 3-6 months.
6. They generally loan as much as 65% of after repaired value. For example, if you found a house for sale for $20,000 in as-is condition and it would be worth $60,000 after repairs, the hard money lender would loan you as much as $39,000, which would leave you with almost twenty thousand dollars to hire someone you’ve found to help bring the house into a livable condition.
7. Hard moneylenders usually do not require a down payment. You heard me right—no money down. A conventional lender almost always requires at least 20% down with good credit for an investor property. However, depending on how bad your credit is, you may have to pay a small fee, but some hard moneylenders can even finance that fee directly into your loan; you just need to ask them about that.
8. And last but definitely not least—they will give you money even if you have bad credit, no pay stubs or no tax returns. This really opens doors for most entrepreneurs. Let’s face it—all of us who’ve ventured out on our own to start our own businesses probably have some bad credit from past bad opportunities, and some pretty pitiful tax returns that a conventional lender would laugh at. So these hard money loans are a second chance for us to make some serious money in real estate. By the way, I can get a conventional mortgage now anyway, but I personally still use hard money loans because what they offer surpasses any conventional loan program I’ve ever heard of.
Find the deals, get approved and make some huge paychecks.