5 Ways to Invest in Real Estate with Bad Credit

by Paul Valeri 05/19/2019

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

Paul Valeri

Put my record as the longest standing Certified Residential Specialist in all of Western Connecticut to work for you today. Licensed broker in CT since 1973, REALTOR Emeritus, I remain at your service, full-time and vital as ever, specializing in Fairfield and Litchfield county residential & serious commercial activity. My picture on the porch of my current home speaks to the fact that I, also, specialize in the design, sale, and construction of classic full log homes, carefully crafted out of specimen full logs originating from First Nation forests off the west coast of British Columbia. Scandinavian scribed, these full log homes are rarely, if ever, available in the eastern United States.

Paul Valeri: born In 1948, married, resides in Bridgewater, CT in their lodge of full log western red cedar. A graduate of the University of Notre Dame. Bronze Star decorated Vietnam Veteran. Owner-Broker of Paul Valeri, REALTORS since 1975. President of the Non-Profit Development Corp of Danbury since 1981. Founder of Danbury’s Vet House, home for ten previously homeless veterans. Canadian Board of Directors for the Miramichi Salmon Association, and founder of its First Cast MSA, a mentorship program that introduces new blood to Atlantic salmon fly fishing. Trustee with the Danbury Museum & Historical Society and its Moderator for The Hat City Ball.

Hobbies include mountain hiking, fly fishing, and playing golf (badly), walking preferred!