Buying a House with Bad Credit

You can do real estate with or without good credit.

According to new figures compiled by Fair Isaac & Co., almost 26% of consumers have FICO scores below 600, an increase from the past two years and a reading that indicates it could be next to impossible for these borrowers to get a new mortgage.

That means one out of every 4 people can’t get a conventional mortgage. This is one of the fears that new investors have as they consider starting to use real estate to build wealth and passive income. You need a 620 or higher to get a mortgage.

The truth is hundreds, no thousands of retired real estate investors today started out with bad credit and many with no money at all. I am one of those people.

When I started I had to be aggressive and creative. If you are one of the 26% they are talking about, you will have to do the same thing.

One of the first things I did was contract flips. This required none of my own money or credit. I simply found deals for people with money and credit. I was paid any where from $3000 for a basic single-family deal to $40,000 for a 72 unit apartment complex. I did all this without a real estate license too since I was simply selling the rights to my contracts.

After doing this for a while I began to realize I was just making money like a job. I wanted to start building some permanent residual income like the other investors had. I knew that as soon as my passive income met and exceeded my bills that I would be financially free.

I then began looking to the same people that I had flipped the deals to for money to partner with. I then began buying everything that I could. From duplexes to 40 unit apartments. I bought everything that I could get my hands on.

Almost every one of the 13 apartments I did in my early years as an investor was owner financed. This required no credit check. I got the down payments from my partners that I met at local real estate investor groups.

Make note that while all of this was going on I was diligently working on my credit. I began to equate my credit score to my word. Was I a person that kept his word? I then paid off every piece of consumer debt I had except for home and cars.

I saw my credit score jump from 540 to over 740. Let me tell you, this changed every thing. I was now able to do my own deals. Banks where bending over backwards to lend me money. My world changed and so will yours.

The next deal I did was when a young man with bad credit and no money who came to me and asked would you help me buy a 208 unit apartment complex. I did. We now own over 3300 units together.

The process broken down is like this:

  • Join local and national real estate investor groups for continuing education and contacts for money and credit.
  • Partner with people who have money and credit to do deals.
  • Pay your bills! Make your credit report an example of who you are. Get that score up to your level of personal credibility.
  • Do as many deals on your own as you can.
  • Now that you are up and running, look to help someone who may be starting off like you did with bad credit and no money.


  1. There is certainly a great deal to know about this subject.

    I love all of the points you’ve made.

Speak Your Mind