How to a Buy Real Estate With Little Cash & No Credit Using Credit Partners

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A credit partner is a real estate investing strategy that allows you as a real estate investor to buy a property with little cash and no credit. And the credit partner gets to invest passively in real estate while still earning a good profit and minimizing their risk. You'll learn how this win-win strategy works, including real-life case studies, in this video.
Companion article with additional resources: www.coachcarson.com/credit-pa...
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[@CoachChadCarson]

What about having little to no time? You can still invest in real estate even while working a full-time job! ► kzbin.info/www/bejne/gKPGYat4fdaSrpo

[@robh3357]

Yes!! I get it now. Awesome explanation for us visual folks. Thanks Coach.

[@CoachChadCarson]

Happy to help!

[@elan3studio765]

WOW !!! Great Video, Very Educational Chad.... Keep up the good work...

[@CoachChadCarson]

Thanks, will do!

[@seanmckay9194]

Really strong drill down thanks Coach! I had been confused about the moving parts and how to get paid and not create a seasoning issue for the tenants that are purchasing the property. Thanks for connecting the dots for me!

[@CoachChadCarson]

The financing is sort of a moving target as rules and procedures change with lenders. But as long as you're 100% transparent with everyone involved and find a credit partner you trust, there seem to be ways to work it out.

[@killianankers2169]

Another great video Coach, thanks! I've been wondering about the best way to set up an investment partnership. Would never have thought about this lease option route. Thanks!

[@CoachChadCarson]

Thanks! There are definitely multiple ways to do partnership, but this is one i like.

[@gregthomas3137]

This is great! How do i find a credit partner? I need one right now

[@UltimateBargains]

Finding a great deal to sell to your credit partner is usually in the form of acquiring an option to buy the property from the owner, and then assigning (selling) that option to your credit partner. The assignment of the option contract to your credit partner is with a separated Assignment Agreement, signed and notarized only by you. When you assign your option contract, the Assignee (the new Optionee) will sign the assignment agreement, and then becomes the new Optionee. The option has an attached Purchase and Sale Agreement (PSA) that is signed and notarized *only* by the owners of record. The owners will escrow the signed and notarized conveyance documents. The then-current Optionee exercises the option by signing the attached PSA and closes the transaction. If you required the owner to record a Memorandum of Option, then you would appear on the closing statement as a third-party service provider "Removing cloud from title" for your fee. One subtle detail is that when you assign (sell) to your credit partner your option to buy the property from the owner, you cannot obligate your partner to grant a lease-option to you. That would be considered selling an asset while retaining the contractual right to manage that asset, which means you are selling a security, which requires a securities license. However, you can mention in your *Memorandum of Understanding* (a distinct offering document) to your credit partner that you are separately offering a Master Lease and Option: "The Assignor is offering a Master Lease and Option (MLO) to the Assignee. Accepting the MLO is not a pre-condition for assigning the option contract to the Assignee." *I am not a lawyer, so don't believe anything I say and ask your attorney for legal advice regarding your situation.*

[@CoachChadCarson]

What if you just let the credit partner put the deal under contract with the original seller in the first place? Letting them work directly with the seller seems to avoid a lot of the hassle you mentioned. But I get that it's not always possible. So, I appreciate the extra detail.

[@JWS66]

Very interesting. A lot of moving parts for a beginner like me. Is the goal to get rid of the partners and do the deals on your own,or do you continue to work together?

[@CoachChadCarson]

Either on your own or together. It really depends on your goals and your credit partner. The structure is flexible. And I can see how it might seem a little intimidating because it's not a concept people use every day. But after the upfront learning curve and with the guidance of a competent local attorney, it can be straightforward afterwords.

[@markholbrook4026]

Thanks for teaching us this method. I am in a position to be a credit partner. How do I find the guys with the real estate hustlers?

[@CoachChadCarson]

I would start at local real estate meetups where you can network with people and get a gut feeling for who you trust (and who you don't!). I'm sure there are all sorts of potential entrepreneurs, but it might be either a younger person without a lot of credit history or a self-employed person who doesn't have easy to verify income.

[@bramnc]

Mark I'm a Coach Carson student and have been involved in real estate for over 20 years. I've got a small multifamily complex you may be interested in. If you want to learn more, please email me at [e-mail] Thanks

[@fabienalemania4808]

Thank you so much for an awesome video! I have been searching for this kind of information a long time. I hope you can answer my question. My parents bought a house in Arizona years ago. I want to start invest in real state. BUT I leave in Europe. So if they cash out refinance their property and buy a new house could they just kind of “give me the new house” as a present? Or do you know if we have to do a LLC ? Or a option contract? Ps I am a non- resident foreigner.

[@CoachChadCarson]

There are a lot more details to be able to tell you for sure what you can or can't do. But if your parents or anyone wanted to work with you and you didn't have a lot of cash up front, a lease option like I shared in this video is a great tool to use.

[@fabienalemania4808]

@@CoachChadCarson thank you 🙏🏻

[@jjtheglove]

Hey coach, I heard you on BiggerPockets! I'm looking to pitch to credit partners. I see a lot of upside to this structure. But how about exit strategies when deal goes sour? What if the property value goes down to $80,000 for example. Entrepreneur would not likely buy at $100K. And credit partner would have to eat the loss of $10K. How do I explain this to credit potential partners? Many thanks

[@CoachChadCarson]

Thanks for the question James! The risk of property value decline is a real concern, but the only way I address it (and the only way any of us as investors can address it) is by buying the property at a low price today. If your partner buys at 70-80% of today's full value, they have a better chance of not losing money. But there's always a risk. And if I were faced with that situation as an entrepreneur, I would do everything I could to make them whole - like managing it for free or low cost until we can sell it for enough to recoup their investment. But ultimately the investor needs to be comfortable with the overall risk of investing in real estate. If they aren't, they should invest in something else.

[@JamesBrown-rm2rd]

what about buying a house with bad credit, but I have a decent amount for down payment

[@CoachChadCarson]

Perhaps you could partner with someone who has good credit. You could split the down payment and use their credit to get the loan. If you find the deal that could be a good deal for everyone.

[@adambachmann2633]

Interesting video, my question is about credit. Say you are looking to do this more because you have bad credit rather than no credit. Also you are willing to share the risk by going half on the down payment. Would going this route help you with improving your credit? I mean is there anything in this process that shows on your credit history in the same way the mortgage will for the person who is actually taking out the loan?

[@CoachChadCarson]

That's a great question, Adam. In my example - no - you wouldn't be on the loan and this would not be improving your credit. If that was your goal, perhaps you could do a straight 50:50 partnership and both of you could be on the loan. I don't know how all lenders would handle it, but when I first started, a local/small bank let me get on a loan with a more experienced investor partner. I didn't help us at all. But it improved my credit by having this loan. So, perhaps that's an approach you could try with your partner.

[@adambachmann2633]

@@CoachChadCarson Thanks, I think that may be what I try doing! I'm that after 2 years my credit score will be high enough that I can get a loan at a good rate on my own, somewhere around 760ish. I do have a new question about the situation you suggested. If we can only have 10 loans at any given time, would that count as one of the ten for both me and my partner?

[@CoachChadCarson]

@@adambachmann2633 I don't have as much expertise on the 10-loan-limit guidelines. Plus they seem to change. But I would guess that yes it counts against both of your limits. But if it gets you started, probably not the end of the world. I'd worry about that when you get there!

[@adambachmann2633]

@@CoachChadCarson Very true! Thanks for the replies! 😁

[@MrRbtennis]

Hi Chad, thanks for your work! I am a french citizen, foreign national investor and i don't want put cash in a deal and it is really hard to have financing! I find a good deal in Alabama with the SPARTAN invest team and i want to build a real estate portfolio . The credit partner is a really smart idea but where can i get contact? Do you think is possible for a French citizen to have a credit partner in USA? Best regards

[@CoachChadCarson]

Hi Romain. Thank you for stopping by. I'm sure it's possible, but I must admit it's not something I have experience with. I think the hard thing will be finding the local person who you trust (and who trusts you). If you have some existing relationships or if you can network with people here that may help. Perhaps you could attend some conferences here - like the BiggerPockets Conference later in 2020 or other real estate meetups. You could also network on BiggerPockets and start meeting people that way.

[@geoffshank2422]

This video was really cool. I have been looking for options to get into the real estate market and start having more income to work with. I eventually want to have more passive income and I think this would be a great option. The tough part is I am in Calgary, Canada and I don't know if this would work the same here as it would in the USA. Do you have advice on this or perhaps know someone who would be willing to mentor me? Let me know. If I here back from you I will get you my email and perhaps we can go from there. Thanks!

[@CoachChadCarson]

I don't know whether lease options work exactly the same in Canada. But i imagine the concept of partnering with a money partner still works. Start asking around at local real estate meetups or with local investors to see what you find. Good luck!

[@geoffshank2422]

Coach Carson. Ok sounds good. Thank you.