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For a long time, real estate was the most secure industry in the United States. However, after the housing market crashed in 2008, new rules and regulations were created to make the market more secure and to fill the gaps in the system. Real estate remains a popular industry to invest in, but because of its high value, credit history can often become a barrier to making the investment, as well as battling the bank over a foreclosing property. However, it’s possible to invest in real estate regardless of credit history.
Finding the Funds
There are a few different ways to invest in real estate even if you have bad credit. Many private companies and individuals with the funds to invest look for projects where they can receive a good return on their investment, and if your real estate plans look promising, you shouldn’t have a problem finding someone who is willing to foot the initial costs.
One of these ways is through hard money investors, who look less at credit and more at the thoroughness and promise of your investment plan — like what changes you’re planning to make and the demand of the property location. Although they usually only invest about 70 percent of the venture, hard money lenders don’t risk much by investing because if the deal goes south, they keep the property. However, even if the investment is successful, it’s important to be timely with the project, as high interest charges can lower the profit you make on the deal. You can find hard money lenders by doing a quick Google search for one in your area or by attending Real Estate Investors Association meetings.
Another option for funding your investment is to find a private money lender, which can come in the form of a friend, relative, business partner or acquaintance. When you borrow money privately rather than through a bank or other lender, the terms under which you operate are all negotiable. The loan may still have interest charges and repayment factors to consider, but private money lenders are a good option if you can find one to invest with you. You can also join efforts with a business partner who is interested in making the investment and has better credit than you.
If neither of those seem like good options, you can also see if seller financing is an option. This options works best for properties that are paid off with sellers who aren’t in need of fast cash. If you can find someone to work out an agreement with you, the terms will be negotiable and the closing costs will be low for everyone involved. Another option is to consider wholesaling, which means you simply have to facilitate the property sale in order to get a cut of the final sale.
Flipping the Property
If you’re investing in real estate to flip properties, there are a few steps to follow in order to avoid creating a bad deal that can blow your investment. This includes taking the proper measures to investigate a property and ensure it doesn’t have any health hazards like lead or asbestos before purchasing it. These chemicals can cause serious diseases, especially during renovations, which means your health may be compromised if you purchase high-risk real estate. A study shows that diseases like mesothelioma, lung cancer, gastrointestinal cancers and asbestosis will claim over 100,000 lives over the next four decades.
In order to successfully flip a property and make a profit that’s worth your time, you have to invest in the property to raise its standards so that someone will be willing to pay for it. Modern technology has made raised the expectations of people in the job market, and many now look for environmentally friendly homes with up-to-date appliances. When making renovations, invest in eco-conscious appliances; sinks, showers and toilets all come in water-conscious options that can help save gallons of water with each use. These will help raise the value of the home and help you find the deal you’re looking for.
The real estate market is a promising one that can get you a large return on your investment if you can handle the deal properly. Although finding the funding for the investment is much easier with good credit, it’s still possible to find investment opportunities even with bad credit.
