Real estate expert reveals how to buy a house with NO money and a BAD credit score
A REAL estate expert has advised “don’t wait” to buy your first property as he reveals how he made his first purchase with no money and a bad credit score.
Life coach Rock Thomas claims that it is possible to “house hack” the system to get on the property ladder but it comes with one major compromise in having to rent out rooms.
Thomas was 25 years old when he bankrupted his restaurant in a year after borrowing $25,000 from his mother but moved to Quebec City hoping to turn it around and create his real-estate empire.
“I needed to learn how to hack the system a little because I didn’t have the cash down and I didn’t have the credit rating and if you’re in that situation don’t worry about it,” he explains on his YouTube channel.
“You can do it too, no matter where are, or what your credit rating is, or how little cash you have.”
Thomas says that he began a full-time job as a flight attendant and also parked cars at a hotel on the side.
Eager to get his foot in the door and pay off the thousands he still owed his mother, the real-estate mentor began reading up and studying the market.
Thomas admits he had no knowledge of real estate but was on the “hunt for passive income” and eager to learn.
On his search around open houses, he came across a property for sale by the owner, generally meaning that the building has proven hard to sell or has some issues with the bank.
Thomas says that he was instantly intrigued by the $65,000-building and learned from its owner that many of its seven-bedrooms were being rented out to people who needed to be fed and looked after.
It is not clear how the building was being used but Thomas states that he was willing to take on the tenants who were in total contributing $2,400 a month in rent.
“You have to decide how high you want to climb to succeed,” Thomas states of his success of breaking through the bad credit score barrier, adding that he needed to use “creativeness and resourcefulness” due to his lack of cash.
The owners agreed to loan him the money to purchase the house for $62,500 and he gave them a down-payment of $2,000 on his credit card while paying the rest back on an eight percent interest rate.
Thomas claims that rent from the tenants covered his principle, interest, taxes, and insurance on the building; allowed him to pay for their food; and also allowed him to hire a person to look after them while he left for his job during the day.
“I ended up living there for free,” Thomas says.
“No rent to pay because they were paying it. No taxes to pay. I lived there for free and once I hired someone to look after them, I was able to put away about $500 a month, which is not a ton of money but was able to put it into my pocket.
“When you have a house hack and have someone else pay for your expenses – your principal, interest, tax, and insurance – you now take that money and reinvest it and pay off your debt like I was doing for a while and eventually into purchasing another property,” he continues.
“If you are not able to purchase a property you put somebody into a room in your property or you purchase a property that has someone in the rooms.”
Thomas admits that the move meant that he had to compromise on his quality of life “but if that’s what it takes to get you over the hump and into your first property are you willing to do it because I was.”
“If you want to become a millionaire, if you want to become financially free, house hacking and getting your first piece of real estate, you’ve got to be hungry and willing to do whatever it takes,” Thomas adds.
He says that he sold the building two years later and opened up senior citizens home where he was able to bring in $110,000 a year.
“If you want to get in the game, fight to get in the game, use a strategy to get in the game,” Thomas recommends.
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Rocket Mortgage also advises that having a bad credit score does not automatically exclude a person from reaching a mortgage.
They do advise, however, that cash is key in those circumstances.
The company also warns that acquiring a bad credit mortgage also comes with a higher interest rate so you should be prepared for a higher monthly payment.