Problem-Have $$$, but bad credit. - Posted by CinNJ

Posted by CinNJ on November 22, 2000 at 04:24:16:


Thanks…Actually the property I’m interested in is a triplex. $26,000 in gross rents, $7639 in expenses w/o debt service. Offering at$180,000. Owner is selling his portfolio and retiring. I’ve seen the property and the landlord (seller) keeps it in A++++ condition. Labels everything in the property, and keeps good care of the exterior.

Going to talk to a local bank that I have a $100,000 CD with to help me structure loan despite my credit dings. My concern is w/ the dings and the lack of 2 year continuous work history I will not be able to finance this deal. As it looks now, I’m planning on offering $155,000 w/ $40,000 down.

I’ll let you know how things go next week.

btw-My goal is cash flow, I’m interested in almost exclusively multi unit properties.


Problem-Have $$$, but bad credit. - Posted by CinNJ

Posted by CinNJ on November 16, 2000 at 04:00:17:

Hello all-

I have my eye on 2 properties in my area. A duplex for ~$125,000 and a 5 unit property for ~$160,000. I plan on putting cash down in the amount of $40,000 in whichever property I decide on but have just discovered a MAJOR problem with my credit report that I have to admit is legit.

I ran my credit report and found that I have a $125 charge off from a bank and a $250 charg-off from a credit card company both from 4 years back. Unfortunately like too many recent college grads at the time I got into much CC debt and was irresponsible with my credit. I know that once i pay these off (THIS WEEK), they still reflect on my credit for 7 years I believe. :frowning: I have been able to save quite a bit of money in the past few years but have never held a position in my industry (Information technology) for more than 1.5 years (another NEGATIVE in lending). To add to that I work most of the past 2 years as a TEMPORARY employee to gain experience in my field (ANOTHER NEGATIVE in lending)…I have now been a consultant for the past 4 months and realive that lenders will take an average of the past two years salaries into account, much like they do for Realtors.

This is my quandry…I am very apprehensive to even approach a lender wth my situation. I grew up (parents were successful Realtors) around real estate and am ready to take the leap, but would like to get some kind of idea what I will be up against with a lender if i ask to see what I qualify for and what I need to do immediately to improve my credit.

Thanks to all in this group, you are most helpfull


Getting a conforming loan will be a cakewalk - Posted by Paul Macdonald

Posted by Paul Macdonald on November 20, 2000 at 20:58:10:

for you. Take your stuff to a lender. Have them review. You’ll qualify almost guaranteed (presuming there are no other credit issues). Good income. Good down payment and credit derog’s that are four years old? You’re a lenders dream. They will get you qualified and charge you an extra point or extra 1/2% to your rate or so cause they can get away with it and you’ll have your deal.

Worst case scenerio (and I don’t think it would go that far based on what you wrote) you’ll get kicked into Fannie/Freddie’s expanded loan programs.

Your a cakewalk. Go get prequalified and buy those houses.

Really important though!! Don’t let your credit guilt cost you money. DO NOT TELL THE LOAN OFFICER YOU THINK YOUR CREDIT STINKS!! They will get you approved and charge more than necessary.

Re: Problem-Have $$$, but bad credit. - Posted by SCook85

Posted by SCook85 on November 20, 2000 at 19:36:13:

Although your charge offs are not good. The combination of the age of the charge offs and you paying them off will almost nullify the fact that they are there. Most underwriting guidelines only look for late payments in the last year or two and do not go back beyond that. Some programs even allow for charge offs.
The fact that you are willing to put down $40k dollars will help your case greatly, especially since you are dealing with income producing properties. I would suggest going to a smaller local bank and discuss your situation with them.


Re: Problem-Have $$$, but bad credit. - Posted by June

Posted by June on November 19, 2000 at 19:36:07:

If you pay those charge offs they will remain on your credit file. I’ve found it hard to negotiate taking this derogatory info off even when they’re paid in full. If you dispute them though with the CRA’s, being that they’re so old, I would be willing to bet that they will be removed completely.

Re: Getting a conforming loan will be a cakewalk - Posted by CinNJ

Posted by CinNJ on November 20, 2000 at 23:29:58:

Thanks for the suggestions. I have my paperwork all set except for my newest credit report to show the lender (though I am assuming they’ll run their own too) and want to get qualified.

Thanks for the help


Re: Getting a conforming loan will be a cakewalk - Posted by Stan_PA

Posted by Stan_PA on November 22, 2000 at 24:21:40:


I find it very interesting that many of the people who apply for financing have no downpayment money, major recent credit problems, and yet they expect miracles. I also find it ironic that some very responsible people who might have had some minor difficulties years ago, have worked to amass a sizeable downpayment, are fearful that they will be turned down for a loan.

As Paul indicated, based upon what you have written you should be in fine shape to arrange financing on the duplex at least. The only thing you need to be aware of is that the 5-unit property is outside the scope of normal residential lending, which is limited to 1-4 unit dwellings. You will need to approach a commercial lender to get the 5-unit done.