Bouncing On The Real Estate Bubble...How The Newbie Breaks In
Creative real estate investors have been experiencing a boom
over the last decade. They have been able to see some serious
profits in a relatively short period of time. Some markets
continue to show this amazing growth too. Areas like Phoenix, AZ
and Las Vegas, NV are as hot as the desert that they are located
in. Some people predict and end in sight very quickly, while
others believe that it will continue. Now, being that this
article is based on facts, let's agree that we are currently in
a real estate boom. With that being agreed upon, we can now move
on to the lesson at hand.
The "how to" business is booming in real estate is as hot as
some markets. Most of these self proclaimed gurus will tell you
that you can make money in any neighborhood, in any economic
climate, all while being in any financial situation you happen
to be in. This may have worked a few times, which gave the guru
a name or a motive, but the fact is that you need to have
yourself in a good situation before you begin in real estate
investing.
Let's take a look at Maryland, Kentucky, North Carolina, and
Texas just to name a few. These states have all passed or have
pending legislation that will put a serious hurt on the creative
real estate field. There is no way that Texas investors for
example, can do a lease option if it is illegal correct? There
is a provision though that states that the investor can buy the
property outright (most newbies do not have that kind of cash),
or he can use his line of credit (sorry, this is reserved for
people with decent credit), or he can get a simple loan and ask
the banker to agree to what he wants to do (this is easier than
it sounds but you still need good credit).
Every day I am asked by a new real estate investor (or wanna
be), what the best route to take is when getting into the
business. My same old answer is that you can learn any type of
investor style, just make sure that you have yourself in order
first. One word of caution too, don' be fooled into thinking
that you can spend some cash and instantly have business credit
and be able to take down properties in the company name. Lenders
have tightened their belts considerably when it comes to lending
to an llc or corporation with credit. Yes it is possible to get
corporate credit cards at Home Depot and Office Max when you
have some corporate credit, but unless you are going to build a
building and type a letter of thank you, you again need credit.
Lenders will lend in some instances to a corporation with good
business credit, but only if the company owner or representative
signs as a co-signor or what they call a guarantor which states
that they are backing the loan in their name and guess
what...Yep, they need good credit.
Newbie investors truly need to understand that it is nearly
imposible to have sustained success without a stable credit
score behind you. Stop spending countless time and money or
various programs and first step back and get your own financial
house in order. Don't fall into the misconception that it will
take years to clean your credit up. There truly are ways to
climb out of the rut that you are in and it does not have to
take years to do. With most credit reports containing blatant
errors, a person can upgrade their credit quite easily. There
are also ways to add things to your files that will make you
more appealing to creditors. Most people do not know that you
can add character references to your reports. This in itself can
add a distinct advantge when looking for lenders to accept you
as it is setting you apart from the masses and that's what it is
all about.. Adding positive credit is a very simple aspect as
well. You might not be able to remove everything negative, but
at least cancel it out with something positive.
The journey into real estate investing can be a wild and
financially rewarding ride. The averge Joe can be financially
secure in a matter of a years. If this is truly an area that you
want to concentrate your time, effort, and money in, do the
right thing and get yourself prepared for what it will take. Do
this even before you attend your first seminar or buy that first
course.