Ed, can you help me to purchase my first home? - Posted by JB

Posted by Ed Garcia on December 28, 2001 at 10:16:57:


Here are 9 ways to do deals if you have a credit problem.

In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.

Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call (where the bodies lie) another words what is the seller’s main objectives or motivation. That allows you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.

Here are the 9 ways that I’ve mentioned.

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

(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 ways 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.


I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.

If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.

(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.

JB, I hope this post is helpful to you and if you feel you would like to discuss this further feel free to call me at (909) 944-0199.

Ed Garcia

Ed, can you help me to purchase my first home? - Posted by JB

Posted by JB on December 26, 2001 at 16:30:18:

I have had a run of bad luck in the last 2 years. My wife got sick, wasn’t able to work anymore, medical bills drained the accounts - all of them. We had to declare bankruptcy. There was no way of getting out of the financial disposition that we were in without going chapter 11. The consumer credit counselling agencies did very little to help, as a matter of fact the prinicple kept getting larger (we haven’t used credit in 3 years - any type). Anyways this is not a sob story, but I am having a difficult time at having anybody (lender) talk to me about purchasing a home here in southern california since my FICO score is so low 525. Would you do me a favor and e-mail me some of your thoughts on this on how to find a way to purchase a home - nothing grandiose. Just a place to call home.

I liked your thoughts on previous posts, like:

  1. doing a partnership
  2. Using somebody elses (family or friend)credit rating (isn’t that co-signing?)

I know what I want, the only problem is going about and asking the right question to the right person - does that make sense?

I would appreciate it if you would/could respond to this.

Thank you


p.s. I have submitted to you a request/application on Dec 21.