Bad Credit but lots of cash- How to proceed? - Posted by Leonard Applebaum
Posted by Leonard Applebaum on August 18, 2003 at 06:42:46:
My situation is somewhat complicated but here is a summary:
After completing a 7 year ownership of a NOO duplex in Denver, with average returns of 200% per year (NOT a typo!: Two hundred percent!: Denver’s market was white hot during the 90s. I bought my property for 49K in '93 on a $6,500 down owner-carry, and sold in 2000 for $150k after one refi in '97). Moved to Israel in 2000 for work, but the market here crashed and I lost my job over 2 years ago. Have lots of cash to invest but suspect my credit score, formerly 680, is now in the tank, due to approximately $25K of charged-off credit card debt on 9 different credit cards.
I am considering moving back and investing again: Two alternatives come to mind: I am respectfully requesting advice on which is the better tactic:
I have enough to do an all cash deal in a certain somewhat depressed area of the US (I have researched the area in person during a two week trip to the area last fall and discovered dozens of duplexes available in the $40K to $50K range with potential returns over 20%, greater returns possible if I am willing to deal in poorer areas with properties in the $20 to $30K range). Try a 75% LTV hard money refi after one year of “Seasoned” ownership (or possibly immediately if some lender will do so).
Pay off all of my approx. $25K of charged-off credit card debt first, and then use the remaining cash to get into a deal. If I do this, how long would it take to improve my score enough to qualify for a NO DOC loan?
Thank you for your help