Do You Need Good Credit For Owner Financing?

Do you need good credit for owner financing? In this video, I’ll discuss whether I look for good credit from the people I sell my houses to or not. It’ll include how I size up my buyer’s and what’s important to me.

Do you need good credit for owner financing?  my name is mitch stephen and i’ve been owner   of my buyers for a 2 decade-plus career.   for good credit from the people that i sell my   houses to?” you’re going to find out exactly how  i size up my buyers and what’s important to me.   so, in this episode, we’re going

To talk about  how you find good buyers. and i’m going to show   you how buyers with horrible credit scores might  be your best buyers. i’m also going to talk to you   about other methods to size up the integrity of  your buyers than just the credit score. because   going to show you how to investigate and things  

Investigate. then after i’m done with helping you   find the buyer for you, i’m going to talk to you  about how you as a real estate investor don’t have   to have good credit to do this game. in fact,  most of the people that i know that are very   successful in this business started out broken  with bad credit. and when you start

To look   into the subject a little deeper, we find out  that that was probably one of the biggest plus   points for them was that they were broke and they  didn’t have good credit. and i’ll explain that.   one of the common misnomers in my industry is that  when you’re dealing with people with bad credit,   that’s going

To be problems all the time   know, there is such a thing as good people,   even great people that had bad things happen to  them and that’s what i’m really looking for. now   low to bad credit scores. but that’s my niche,   my living that’s where i make my cash flow,   that’s where i make my financial independence 

Because i’m an expert at that niche. and what   i’m looking for again is good people or great  people that had something bad happen to them   event that caused the problems is done. the credit   report is not forgiving them. i’m going to forgive  them. i am not a machine. i am not a box that gets   checked. i’m a thinking

Rational person. when you  fill out these applications forms for traditional   mortgages, that’s a box that you have to check.  it’s a written unforgiving, not listening,   not paying attention set of guidelines. and i’m  not that. so, i go through and look for all those   people that the traditional banks rejected. and 

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I find good people that had something bad happen,   but that bad thing’s over they’re recovered but  their credit score is not letting them recover.   particular story that stands out. one time,   i had this lady and she wanted to buy my house and  she had the 10 down, it was no problem. in fact,   was her credit score

Was like a 420. so,   when we started doing our research and we pulled  the credit we started doing the background checks   and started doing everything that we do, i was  noticing this trend in her background. she was   going along fine for a lot of years. and then  about 3 years ago everything went to hell in a  

Handbasket. it’s like the wheels just fell off the  train. it was a massive wreck everything in her   credit report plummeted and went into disarray.  and it went like that for about 2 years and then   starting about a year before she came to me, it  started to clear up. and right now when i was   again. so, when she came in,

I asked her,   “you know you used to have really good credit and  then something happened and everything got messed   got back on track again. can you tell me what   happened?” and she said, “yeah, it’s simple. i  was married to a truck driver. i have 4 kids,   he was the breadwinner. he was out on the road all  the

Time making the money to pay the bills. i was   at home taking care of our 4 kids. it’s impossible  to work when you have 4 kids. young kids.   and that’s what i was doing –staying at home.  being a stay-at-home mom. and he got killed in   a truck wreck.” so, it was very difficult. as you  can imagine, she told me that you know

Her world   just went into disarray. and then i said, “so,  what happened? what changed?” she said, “i met a   man that makes 4 times more than my truck driving  husband.” problem solved. i took the down payment,   years and years and years. it was a good person   who had something bad happen. and then that tragic 

Event cleared up. probably more important than the   credit score is the history of where these people  have been living before they got to me. i want to   see what the place looks like that they lived in  because if i can find out where they live before   me and i can go back and look at the house that  they’re living in now,

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I can tell you what my   house is going to look like in 30 days. so, when i  go find an excuse to visit them wherever they live   or to drive by the house to look at the outside,  i can pretty much tell what my property is going   to look like in 30 days. so, it’s really important  to not only if you’re really, really serious

Drive   by the house where they live where they’re living  now or the place they’re living now. if you don’t   have that opportunity then we have to contact  the landlords or the property managers or the   apartment complex manager where they lived. and we  need to try to find out who they were and how they   were when they

Lived there. were they on time? did  they take care of the property? was there deposit   refunded? how long were they there? were they  any problems? did the police ever come? you know,   got to be kind of careful in this because think  of the roles were reversed and you were a landlord   that wanted to get rid of these people. i

Wouldn’t  be telling you anything bad would i? so, you’re   going to have to learn to read between the lines  and use your gut meter to decide whether you’re   being told the truth by these managers. more than  a few times in my career, the managers or the   landlords have not been honest with me because  they want to get

Rid of them. they’re not going   to tell me anything bad about them. they actually  want me to say yes to their application and get   them moved over and make them my problem and not  their problem. but a lot of times we can tell just   on the reports how much they transfer. i also like  to check to see if they’re litigious. and

There’s   ways to find out. how many times these people have  filed lawsuits. you might be surprised to know how   many people i find that are applying for my owner  financed homes that have sued a lot of people   don’t make it much further through my front door.   that sue everyone they come in contact with.  

Would you? so, these are some of the ways that  i size up my buyer and this is why i have a .02%   foreclosure rate in the last 300 properties that  i’ve sell or financed even during covid. so,   while credit scores are important, they’re not  the only thing. it’s just where we start. if we   can see where things have cleared up

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Then we might  choose to stop there. if we really like the people   but we’re not getting enough positive information,  then we’ll go search some more things to see if we   can find some positive answers. my goal is to say  yes to everyone but i need a reason to say yes. i   may need multiple reasons to say yes depending on 

How bad that credit score is. so, use credit score   as a starting point and then use other resources  at your fingertips to really make up your mind.   now, let’s talk about the other side of the coin.  you’re an investor and you don’t have good credit,   may be your greatest asset because you’re   going to learn how to

Do this business without  bank or traditional credit. believe it or not,   bank credit or traditional credit is where so  many investors have gone under and have to file   foreclosure because those debts are unforgiving  and they’re relentless in their pursuit and they   can wipe you out. if you learn to do real estate 

Investing without having to sign personally or to   guarantee, that’s really the way that you should  do real estate investing. so, having bad credit   way we ought to do it in the first place.   and that is without guaranteed credit. there’s a  lot of creative ways to do this business. there’s   more ways than you can even

List. that’s the magic  of this industry. find a strategy that you’re   suits your market. and with or without credit;   go become financially free and go be who you’re  supposed to be. credit has nothing to do with who   you’re going to be. so, if you’re listening to  me now, you’ve listened to this entire episode.  

Offer you the first 100 pages of my book.   financial freedom. it’s about 400 pages long.   it’s a great read and it’s how i started broke.  and how i fell down, got up, morphed; fell down,   got up, morphed; fell down, got up and morphed.  hence failing forward to financial freedom and   how i decided to not quit and how

I learned to  buy about 100 houses a year for 2 and a half   to financial freedom. go to,   click on the free stuff tab and you’ll see it down  there. first 100 pages, free. thank you very much.

Transcribed from video
Do You Need Good Credit For Owner Financing? By Mitch Stephen