How to do a deal with no credit and no cash.
All of us run into a situation sometimes when we believe to have good deal on hand but cannot get any money to make an offer on the home. This is after one called everybody one could think of – hard money lenders, banks, family.
To start with, ask yourself why hard money lenders, banks, and even your family are turning you down. Do the people you are trying to get money from have confidence in you? Or you can’t get qualified because your credit isn’t good enough? And is it really a deal? That is very important: Have you found a buyer and are you sure you have a deal?
If the banks and hard money lenders are rejecting you, it means you can’t qualify with their standards. Normally, if it is truly a deal, they should not deny you a loan. There may be another way to structure the deal to make the hard money lender more comfortable. Maybe you can offer some kind of collateral to make the banks or family more comfortable and get them over their fears.
Then how can you do a deal if your credit isn’t good enough and you don’t have any cash? I have been there before, all successful investors have been there. Here are a few suggestions.
1. I doubt you have talked about money to everyone. Sit down and list out everyone you know who may have money to lend i.e. doctors, lawyers, etc., also everyone you know who may know of someone that has money (everyone you know knows someone else). Even if this process does not produce the money for this deal, it is a useful process that may bring up a contact or give you an idea for something else.
2. Maybe financing a deal is not what you should do in this situation. There is a way to structure the deal where you can control the house for a while until you sell it. Put the property under contract – you will only risk a small amount of earnest money – and try to get 30 days to find a buyer for it – then either assign the contract or double close the deal.
3. Maybe this is not the deals you should be starting with – meaning, maybe you should start out bird dogging, finding deals for some of the big investors in your area right now while you build your contacts and develop your relationships.