Ed, They won't let me have any more $$$..what now? - Posted by Hatmat

Posted by Ed Garcia on March 01, 2001 at 24:15:28:


A true hard money lender would not limit you to 3 deals, so you may be at a lender that is just taking a chance on you.

Just for you I whipped a little piece out of my archives.

9 ways to do a deal with bad credit

I just finished answering a post that I thought might be interesting for newbies who are just starting out and have poor credit.


In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.

Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call (where the bodies lie) another words what is the seller’s main objectives or motivation. That allows you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.

Here are the 9 ways that I’ve mentioned.

(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.

(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.

(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.

(4) SELLER CARRY BACK: This is one of, if not my favorite ways to buy. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.


I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.

If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.

(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.

(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.

(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.

(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.

(9) CREAT YOUR OWN MORTGAGE: In our work shop, Terry Vaughan covers this, and shows you how to discount it and market it.

Hatman, I hope this post is helpful to you and will encourage you to stay with it. The only way you won’t be successful in this business, is when you stop trying.

Ed Garcia

Ed, They won’t let me have any more $$$…what now? - Posted by Hatmat

Posted by Hatmat on February 28, 2001 at 21:49:56:

Ed, I’m sorry for repeating an old question. How do I get around the old rule of " …no more than X amount of loans". My hard money lender ( whom I love working with) told me that we have to sell a house before we can get another loan with them. The funniest part is that we only have 3! One is our home loan, the other is a rental property that we bought with hard money and the third is a rehab in process.
I can’t believe this could be the end. How am I supposed to be productive and profitable if I have to wait to sell a house before I start looking again? I do realize there are other ways(i.e. land contracts, subject-to’s) but I love the world of buying reo’s for rehab!
Please tell me there’s a better way! Just for the record my credit is shot but improving. My home loan is brand new (december 2000) and the rental we got in october.
Thanks in advance for the advice!