How to use someone else's credit to purchase property?

How to use someone else's credit to purchase property?

Hi everyone, I haven't been here in a while but I still like to learn about real estate in my spare time, so I started reading "Be A Real Estate Millionaire" again and decided I'd come here for help, since everyone here seems to be so helpful on this site as I remember.

My question is how would the whole process of using someone else's credit to purchase a property work? The story on page 214 with John and Vickie where they use a partner's money and credit to get them started. How would they purchase the property? Would they take ownership of the property themselves and the partner gets the loan for them to buy it? Or would the partner take ownership and purchase the property and then the partner lets them do all the renovations and selling of the property?

A good detailed answer would be highly appreciated and may just help me get started in this Real Estate adventure, thanks.


"Open minds backed by knowledge, wisdom, persistence, and determination equals unstoppable excellence"

- wrecklessKane

very good question...

wrecklessKane -

This is a really good question. When you are using other peoples money and/or credit to do a deal, normally they (and you) will not be getting a loan in the traditional sense. Investors don't get traditional 30 yr mortgages when doing deals. They will use other sources of funding (aside from cash) such as:

1. Hard Money
2. HELOC - Home Equity Line of Credit
3. Private Money

These sources (except for Cash) will sometime have a credit requirement. If your credit is bad, this is where a partner with good credit can help you get access to funding.

Investors use these sources of funding to "get the deal done". These are normally used "short-term". If an Investor decides to hold on to the property for a long period of time, THEN they will opt for a traditional loan such as a "No season refinance". Pull their cash out (as much as possible), rent the property (now the property pays for itself)and use the cash to work another deal.

I have a student who didn't have any money to do a deal but knew that he wanted to "flip" a property. He found a "Hard Money" lender, then found a deal that fit the HML's criteria, he got a credit card from Home Depot, he brought in his friend (who had no money and no credit but could do the work)

$47,000 - purchase price, 100% Hard Money
$10,000 - rehab, all on his Home Depot Card. Paint, Carpet and a little landscaping

Total: $57,000

Sold: $94,000

Profit: $37,000 (minus closing costs etc)

The day after they put it on the market, they had it under contract for $94,000. Zero money out of their pocket. The friend was the big winner in this scenario. He used his partners credit to be part of this deal. He contributed his "sweat equity", they spit the profit. Done and Done. They are out looking for their next property.

Not a bad deal. All it took was a little thinking outside the box Smiling

Get creative!

Good Luck!




"If it is important to you, you will find a way. If not, you'll find an excuse."

If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125

If you're wondering about John and Vickie specifically...

They acquired a "silent partner," someone with no control over the deal or responsiblity in it. John and Vickie do everything in the deal, use their partner's money to purchase the house, repair everything, get it back on the market. They never dealt with loans or credit because their partner had a ton of ca$h available to pay for investments, repairs, etc. No mortgaging or credit was used or necessary. They have a REA who sells the property for them (so he gets 6%), then John & Vickie split any net money left over with their partner 50-50. Hope this helps.


Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."

Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."

Syndicate content