Buying a House Without Credit, a Job or Real Estate Experience

This sounds like an info-commercial, but it really worked for me. And I wasn't trying to be a real estate investor; I just wanted to buy a house for myself. I don't have any credit, and by this I mean even a credit score doesn't exist for me. I am a foreigner, though I am now a permanent resident, but I didn't know anything about credit or real estate. So you see, I was starting from "ground zero." (Oh, and I forgot to mention: I didn't have a job either.)

Obviously, I wasn't going to qualify for a mortgage loan, since I couldn't even qualify for a CD secured loan?! I didn't give up that easy though.
I went to the library I got a few different books, and I started my research about real estate and ways to buy a house. The one author that impressed me the most and which I would recommend is William Bronchick (he is a lawyer also).

One thing I was always good at was a thorough research. I took some time to "analyze" the market, different neighborhoods, and read a lot of classified adds, made a lot of phone calls. Apparently this tactic was not working, because for about 3 weeks I wasn't finding any "motivated sellers", everyone I spoke to wanted to cash out, for which I needed a mortgage loan.

Then I decided to put an add in the newspaper myself, so let these "motivated sellers" find me. (Hopefully) And like they teach you in the books, and like you've seen it on a million signs, my add said: I Buy Houses Now, Fast and a phone number very big in the local newspaper. There were many adds that were similar to this. I wasn't sure what was going to happen, so I posted the add for only 1 week.

Surprisingly, I was getting 5-6 phone calls a day at the beginning of the week, and about 15 a day through the weekend (I was counting them). Some people were calling just from curiosity, but others were actually sincere. Of course I was looking for someone that was eager to leave their home, and didn't need to get another loan for a house. Wow, like looking for a needle in a hay stack!!

One lady called me and her home was in pre-foreclosure, the house was only a couple of years old, and she didn't have any equity. She told me that she called 20-30 investors, who advertise around town, and in newspapers, but none was interested because there was no equity, she had a loan with 8% interest rate, and the market was down. Anyway, I continued my interview with her, and i almost jumped to the roof, when she agreed to stay on the loan, if I was to save her credit from foreclosure. This meant for me - a home to live in, without using my credit for 30 years if I wanted to. She was 3 months behind, and had already received the letter for foreclosure from the bank. The unfortunate part was that she had a $25,000 second mortgage, and a foreclosure on the first loan. I arranged to see the house, and I told the lady that I had to do some research, before I decide if I wanted to buy the house. I was so excited !!! The house was practically like new, the only thing that it needed was landscaping. It was a mature neighborhood, which surprised me, since the house only 2 yrs old.I knew I was going to do the deal with her before even I see the house. May be that was not-investor like attitude, but it was working for me, the only thing I had to figure out was how was I going to find money for the back payments.
I did my own appraisal, I didn't have much money to pay out for a professional. I wanted to save any penny for the back payments. I got a free "competitive market analysis" from RealtyTrac.com, as well as I personally found from the county appraiser's office the prices of houses sold recently in the neighborhood with similar amenities. I found out that with both mortgages the house was still within or at the appraised value. At least it wasn't over financed. And since I was going to keep the house for a while, the down market didn't matter to me. The mortgage payment was similar to what rents were at the time, so even if I was paying a few dollars more monthly vs renting I was still doing better on the long run.

My next step was to sign a contract for sale with her, and start work on the mortgages. I already checked if there are any other liens on the property, non-paid taxes, etc. and all this info is available on line through the county clerk's office and related links, so I wasn't going through a title company for the closing.
The day I went to see the house I asked her to sign a form allowing me to talk to both banks. When I was talking to the second mortgage bank, I told them that the loan holder was going to bankrupt (which was almost happening), and I tried to negotiate a very little payoff, so everybody clears it off the books. They didn't say no. They were negotiating with me, which led me to believe that they may settle cheap. I beat them down to $1250.00 !! They agreed to receive $1,250.00 and satisfy the note. They were looking at it as receiving some money vs. no money, if the first mortgage forecloses and the borrower bankrupt they were getting zip.

So, knowing that the second mortgage will be gone as soon as I sign the contract and pay the $1250, I was getting more and more confident in what I was doing. The Contract for Sale, the Land Trust documents, the other few docs we signed and notarized I got from Internet, and the William Bronchick book I read from the library. After all docs were signed, I went to the County Recorder's Office and recorded everything so there are no questions about nothing. The whole process from the time she called me to the day we signed and recorded the contract was exactly 3 days. In the consideration of not giving her any down payment for the house, I agreed to let her stay in it till the rest of the month (which was almost a full month), but I had already paid my rent where I was staying anyway and even if I moved out I wasn't gonna get my money back, so she was happy with our whole deal.

Now, everyone knows probably about the clause in every loan: "Due On Sale" The chances are even if the bank new that the house is sold, they have a very high interest rate on the loan at the moment, so they are not eager to call the loan, and as the market is collapsing, they don't know if they will be able to sell the house for even close to what they are owed. So to protect myself even though I didn't think that this was gonna cause a problem, as the part of the sale contract was an Addendum, that the Seller is aware of the "Due On Sale" clause, and if the bank calls the loan, I do not promise to pay it off. I also had her sign an Addendum that I will try to catch the back payments but I do not guarantee.

I was negotiating with the first lender about working with the loan, instead of foreclosing, and I brought up the bankruptcy thing again (it worked pretty good with the second lender) So finally they agreed to sign a forbearance agreement for 1 month, they agreed also for me to pay only interest on the second month, and I did have to pay the 3rd payment in full. So I was able to save the house from going into foreclosure, which saved me tuns of money for attorney's fees, and minimized my out of pocket expense for buying the house. I bought the house for a total of $3000.00, and by wiping off the second mortgage I had some equity (not much but I was happy with my accomplishment).

I left the add in the paper run for the rest of the month, it was very cheap, because I was doing it personally, and not as a business.
I got a few other good calls,3 of which led to me buying a house. 3 of the houses were almost new, just a few years old, but the 4th one was brand new. So in any of these cases I didn't do any repairs at all, I did landscaping in all 4. But in Las Vegas there is an incentive that if you choose to convert your grassy landscape to "desert landscape" the water department will pay you money, so I made a bunch of spending cash just from changing to desert landscape.
And when the second house came available to me, I didn't even have any money to pay for a pay off on any back payments, so what I did was: I signed all documents with the seller, with a 30 day closing date. I gave them $25.00 down payment. The rest of the scenario is the same as the 1st house, but there was no second mortgage. So I put up my first house for sale No Credit Required With a 10% Dwn Payment, or Lease Option To Buy. I held open house every weekend until it sold. It sold for about $20,000.00 above the appraised value (the buyer did not do own appraisal, they had very bad credit and could never qualify for anything, even to rent an apartment, according to what they told me). So basically they paid extra for the convenience of having their own house, working on someone else's credit. And I gave them a private mortgage with 9% interest rate. I took the money from that down payment and I closed on the second house with confidence.

Keep in mind that I have a clause in my contract when I sell a house that way that if a payment is late more that 30 days the sales contract is void and the contract becomes a month to month rental agreement, with the buyer loosing the down payment. This way I don't have to foreclose if someone doesn't pay me the monthly payment, and I can resell the house as soon as 31 days if I wish to.

So, that's it, very simple, and doable in our real estate market situation, this will work in an up or down market. This is how I accomplished buying a house for me without using my credit, and even got a few more.

Thank You for reading my and I hope that it was helpful or at least put you towards the right direction. But knowledge is power, read, you don't have to pay for any of these courses on the TV, you can get everything you need from the local library, and Internet.