Bankruptcy - How will this effect me in REI? - Posted by Mike

Posted by Ed Garcia on December 15, 2000 at 10:29:46:


Thank you for sharing your situation with us. I’d like to start out buy saying that, I hope your son has recovered and is doing well. Of course the BK will affect you in real-estate investing, but it will not stop you. By the way you didn’t mention going into a chapter 13, which is a bankruptcy of re-organization. You might look into that if you have any current real-estate or assets. Also if you do go BK or just want to attempt to restablish your credit go to creditinfocenter. Com. There you will find a credit repair kit as well as information regarding your legal rights and much, much more.

If BK is inevitable for you, try to re-establish your credit immediately. The problem is most people are embarrassed when they go BK and procrastinate re-establishment.

Here are some ways you can do deals if you have bad credit.

(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.

(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.

(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.

(4) SELLER CARRY BACK: This is one of if not my favorite way to buy. Now the best way to utilize this system, is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.

(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.

(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.

(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.

(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.

(9) CREAT YOUR OWN MORTGAGE: In our work shop, Terry Vaughan covers this, and shows you how to discount it and market it.

Mike, I hope this post is helpful to you and will encourage you to stay with it. The only way you won’t be successful in this business, is when you stop trying.

Ed Garcia

Bankruptcy - How will this effect me in REI? - Posted by Mike

Posted by Mike on December 14, 2000 at 23:01:39:

I am looking for any experience on how filing a Chapter 7 Bankruptcy will hurt me when in REI. Currently, I have had a lifestyle that promulgated debt to a tune of about $125k, and I can no longer afford it (Was actually doing fine until my son became seriously ill and my wife stopped working to take care of him at home). I have had some life changing experiences with all of this, and after reading Rich Dad, Poor Dad, I have made a concious effort to change my habits and future.

I am about to transition careers (I am educated and can obtain a decent job of about $70k a year) and feel like I am now trapped under this burden that I inflicted on myself and my family. I want to repay my debt, but it is just not feasible to pay it all at this time. My question is basically, how will filing a Chp 7 BK to start off fresh again effect me when I am beginning my path in REI? My plan is to start with Lonnie deals and flips and then venture into L/O and Subject to-Rentals. Eventually, a few years down the road (or less if all goes well), I would like to roll some of these profits into larger commercial arenas, like MH Parks and Multi Units. How will the BK effect me when I want to do that in a few years (assuming i keep my nose clean and stay debt free from here on out)?

Are there better solutions than filing the BK? I am facing judgements now, and really cannot pay what I owe right away. I tried negotiations, but they failed and I am stuck. What lies down my road?

Thanks to all who have advice (and please, no flames for my mistakes, I get that enough now from creditors calling).