OfflineMany of us that consider doing a lease option may hold off because using a lease option may mean we have to receive payments for months before a tenant is "ready" to buy. Which means we have to wait for our large sum of money.
How do we get them to purchase quicker? Help them get their credit up. They only need to be as high as an FHA loan. This would mean a credit score of 600-620. For many buyer this in not a large jump and they may be just out of range of being able to do this.
A unique way that you may consider helping the tenants credit score to rise would be: Take their option consideration then take this to bank #1. Create a checking account in their name. Have the tenant ask for a loan equal to the amount of the checking account with the checking account as security. Then take this loan money to bank #2 and do the same thing. Then onto bank #3 for the same. Once you are done with bank #3 pay off bank #1. Once this has been done a few times do it again one more time but do not pay off the entire amount. This would mean that you have a balance at the three banks. Pay these payments for 3-6 months and poof - better credit. If this is done right you can get the tenants credit high enough to help them finance out of the lease option. (This information was given at Deans Live Event).
Higher credit can be done in 3-6 months. This means a lease option sale in 3-6 months - for full amount.
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
Thanks for sharing the information. This strategy can really help and put that cash in your pocket even faster with a lease option. Many others may benefit as well, because if other DG members have a low credit score, they can start to increase it by this strategy. Believe and Achieve!
- Joe
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Great Info for everyone with credit issues! Much success.........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
We did that we went to all 9 banks in our community asking for a loan and pledging $5000 to use as security either in a checking or saving account or a short term CD. We took our credit report with us so they wouldn't pull our credit but each bank insisted they would have to pull there own report. We allowed 2 of the banks to pull the report knowing that if 9 pulled it it would negitively effect our credit even more. Not one bank was willing to loan us anything not $1000 not $2500, not $5000. My median credit is 530 my husbands 500 we do have judgments and collections. We even tried to use our LLC but they want a personal guarentee. What else can we do. Our mortgage is in a contract for deed at a super high interest rate and we tried to refinance it but no luck so far. Are we simply doomed. Any help would be greatly appricated.
Thanks
Donna
Hi Donna,
You can try doing the same thru a secured credit card account. There are credit card companies you can search online for that will require you to open a secure credit account with them. Or sometimes a local banking institution will be more flexible. The process can be done in this manner to establish a better credit score. Continued success......Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Yes, have them put the pledged 5,000 in an account that will "freeze" the funds until your loan is paid off in full. That way the bank is guaranteed to receive payment and they have essentially no risk. Ask to speak with a loan officer and it may help to explain you are trying for a fresh start.
Hope this helps.
Jason
I've tried and failed, tried and failed, and again I try. Why don't I give up? I'm hard headed and I Will Succeed or Die Trying!
It's amazing something so simple can be so helpful. I would've never thought of that in a million years.
I am going to incorporate this ideal (with your permission) {:-) into my sellers information. I will also share this with my Mortgage Broker, maybe she doesn't know about this strategy.
Wow again... all these comments are great for a newbie like me.
Thanks again,
Jason King
Nate, Nice post, full of a great way to help people out and get $$ in your pocket quicker, thanks...Jan
Thanks
Donna
The banks pulling credit is a common occurrence. Many times the banks that insist on this are the large banks. For example: Wells Fargo, Chase, Key Bank. If you go to smaller banks with few branches, like 3-5, or if you go to credit unions you will often get a different response.
Also, keep in mind that many of these finance companies, banks and credit unions have never seen or heard this idea before. You may have to press them to check higher management. The banks have NO reason to pull your credit. They have ALL of their collateral in their accounts. If you fail they take your account. It's as simple as that.
Do not let them pull your credit. This will pull your score down. So when you are trying to improve your credit score you are working from a further deficit.
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