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
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,
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
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 1000houses.com, 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
