Credit Strategies for Real Estate Investors
As a real estate investor, having knowledge of how to improve the credit rating of prospective buyers is one key to my success in the current market. Having relationships with mortgage brokers, lenders, credit repair companies and credit card companies has given us the ability to continue in our real estate business even in the current market environment.
Our St. Louis, MO mortgage broker, Jason Palliser, and credit repair expert, Damon Remy, help provide us with the information and expertise we need to buy and sell properties. Jason helps us find the loans we need to purchase our deals and get the loans our buyers need to cash us out. Damon helps us to qualify our buyers for the loans that are available. We also work with local lenders to package multiple properties into individual deals that make sense for us. Every investor needs a team of local experts in this market. When we need additional help we also turn to our relationships with credit card companies.
An excellent source that we use for credit cards is www.IWantACreditCardNow.com which offers a wide variety of major credit cards with low interest rates and favorable terms. There are cards for all levels of credit. Even individuals with poor credit can get a secured credit card. We use these cards to help in the process of credit repair for our lease option and owner finance buyers. By teaching these buyers how to use the card wisely and pay on time they very quickly improve their credit rating. The credit card companies we use report every month to all 3 credit agencies and show the improvements being made. In time, the secured card can be replaced with a standard credit card to continue the credit repair process.
For buyers with somewhat better credit who lack all the funds for that down payment or option payment we look for cards with very low interest and balance transfer cards with very low fees to help fund part of that payment. These cards are especially helpful when our buyers are currently carrying a credit card balance with high interest payments. By getting them a card with 0% interest for a year or more their credit card payments actually go towards paying off those balances and increasing their monthly cash flow.
We also use these cards to help our first-time home buyers establish credit. There are even credit cards for college students, the buyers of the not-too-distant future. When we can help buyers establish good credit we can move them for being lease option and owner finance tenants to home owner status by completing the purchase of our property.
Finally, we use our own cards for our "subject to" purchases involving taking title to a property, but keeping the existing loan in place until our new buyer can refinance and get their own mortgage loan. Often times these purchases require giving the seller a payment of about $2000 to $5000 to close the deal. A 0% credit card is a great way to fund these deals. More to come on this process in a later post.
OS Property Management
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