establishing credit
- Thread starter equalizer442
- Start date
I'm 29 and just bought a house. The bank loved me, they said that I had the best credit they have ever seen.
I got my first credit card when I was 18 and have NEVER carried a balance on it. I pay for everything on it including utilities, food - even my wife's engagement ring! They give me free gas for using it pays me. Credit cards can work for you as long as you pay them off fully every month.
I was always EXTREMELY dilligent with paying bills on time, rent, utilities etc. Banks like a nice pattern of on time payments.
When it came time for the mortgage we saved tons of fees because we had good credit. My house is the first thing I have financed in my life.
Not to say that borrowing is bad, do some reading on time/value of money. Just finance things that are going to appereciate in value. I bet less than 1% of car go up in value.
Good luck, pay your bills on time
Mark F.
87 GN 11.9 @ 115
I got my first credit card when I was 18 and have NEVER carried a balance on it. I pay for everything on it including utilities, food - even my wife's engagement ring! They give me free gas for using it pays me. Credit cards can work for you as long as you pay them off fully every month.
I was always EXTREMELY dilligent with paying bills on time, rent, utilities etc. Banks like a nice pattern of on time payments.
When it came time for the mortgage we saved tons of fees because we had good credit. My house is the first thing I have financed in my life.
Not to say that borrowing is bad, do some reading on time/value of money. Just finance things that are going to appereciate in value. I bet less than 1% of car go up in value.
Good luck, pay your bills on time
Mark F.
87 GN 11.9 @ 115
equalizer442
Active Member
- Joined
- Oct 23, 2002
weve got money in the bank/iras/and bonds but relieing on those i cant make a comfortable living. i dont nescerrally need to spend the money on car parts but it would help me out in more ways then one, i can build my car and my credit at the same time.
btw ive never had a problem with finding/keeping renters. the only real problem is about once every 10 years you have some one who will skip on there payments and then try to leave in the middle of the night or trash the house. a while back we had a fight between 2 diffrent renters and one of our renters set the deck of the other house on fire, broke out a window, and claimed rape but what can you do.
if i dont take a risk and buy more rental properties then im not going to make money. in order to get a loan for a house ill have to take a smaller loan out or use credit cars and pay them off for a while. true it will take a few years for the house to pay its self off and turn a profit but its worked for us in the past and i can tell you from experiance getting 3 750 buck checks a month feels damn good.
GN One Day...
Senior Member
- Joined
- May 28, 2001
I thought you were 17? What do you mean "we"?
You don't have to rent houses to earn money, you could get a job. Why you'd want to complicate your life with rental houses, I don't know. Also, you shouldn't be trying to take out any loan or credit card if you don't have a job to earn money to pay the money back. Get a job, learn saving, worry about credit later. It really isn't that big of a deal, but making a big deal out of it, or seeming desperate for a reason makes it sound like it would be a very bad idea. If your only goal is to establish credit, why go for big bucks? You establish it just as well with a $200 loan as you would a $2000 loan. Except that you need to budget. Gotta have a job. Many lenders will not consider someone who is part time. Some will, but it can be interpretted as predatory lending. They may be more likely to do so if you have 2 full years employment on that job.
You don't have to rent houses to earn money, you could get a job. Why you'd want to complicate your life with rental houses, I don't know. Also, you shouldn't be trying to take out any loan or credit card if you don't have a job to earn money to pay the money back. Get a job, learn saving, worry about credit later. It really isn't that big of a deal, but making a big deal out of it, or seeming desperate for a reason makes it sound like it would be a very bad idea. If your only goal is to establish credit, why go for big bucks? You establish it just as well with a $200 loan as you would a $2000 loan. Except that you need to budget. Gotta have a job. Many lenders will not consider someone who is part time. Some will, but it can be interpretted as predatory lending. They may be more likely to do so if you have 2 full years employment on that job.
equalizer442
Active Member
- Joined
- Oct 23, 2002
faimly bussiness, and i know i dont need to rent houses but im sure if you were in my shoes you would not turn down 750 per house per month down.
GN One Day...
Senior Member
- Joined
- May 28, 2001
Again, gotta have income to get approved for a loan. Buying non-owner occupied isn't hard, but it does require money to budget to pay back the loan and a good bit of documentation. Before you have a renter. That means a job with verifiable income. There may be some info-mercial way of doing it that I don't know of.
$750 a month in rent isn't $750/mo in net income. Subtract the note on the house you want to buy (~$365 on 55,000 @ 7%), the monthly insurance ($40), taxes ($60?), maintenance, etc. You end up clearing a couple hundred or so for the month. When that a/c goes out, you've got to replace it, eating up the $200-300 you cleared each month. That's why, unless the house is free and clear, investors like this normally have 8-9 houses to be able to live off of just that. Most do it on the side. I have had many clients that do this, I see what they clear and what they claim on their taxes. You can do this, but I wouldn't substitute this for a regular job for a long time. Be prepared for a bank to ask you if you're going to college and how you'll make your payments and maintain the house during that time. Can be done, but that is what they'll be thinking.
I'm not trying to discourage you from establishing credit, just be honest with yourself about why you're doing it. Your 17/18, there's no rush. Most likely, they will require you to have a comaker no matter what, except for some credit cards.
$750 a month in rent isn't $750/mo in net income. Subtract the note on the house you want to buy (~$365 on 55,000 @ 7%), the monthly insurance ($40), taxes ($60?), maintenance, etc. You end up clearing a couple hundred or so for the month. When that a/c goes out, you've got to replace it, eating up the $200-300 you cleared each month. That's why, unless the house is free and clear, investors like this normally have 8-9 houses to be able to live off of just that. Most do it on the side. I have had many clients that do this, I see what they clear and what they claim on their taxes. You can do this, but I wouldn't substitute this for a regular job for a long time. Be prepared for a bank to ask you if you're going to college and how you'll make your payments and maintain the house during that time. Can be done, but that is what they'll be thinking.
I'm not trying to discourage you from establishing credit, just be honest with yourself about why you're doing it. Your 17/18, there's no rush. Most likely, they will require you to have a comaker no matter what, except for some credit cards.
equalizer442
Active Member
- Joined
- Oct 23, 2002
i realize that i wont be getting all they money right off the bat as stated as above. what we do when it comes to rental houses is buy older run down houses with out a/c. my favorites are the post war sears kit houses, in a way i collect them. theres always something wrong with a rental house true but in the end there worth it. in all truths out of our 3 current rentals we have only had to put money in to one of them in the last 4 years and all it needed was a deck and some replacement windows. the renter of that house is a contractor so we knocked 2 months of rent off and supplyed the materials. he designed and built his own deck that is pretty much bigger then the house and instaled the windows and did a better job then we could have. on top of that we gave him the go ahead to dig a basement and cement it in. we got all the proper building permets and he dug it. the houseing inspector was happy with the job and so were we sence it raised the value of the house and it was free. dont take me wrong we have been taken for rides in the past but thats all part of the game.
i dont plan on using it as a subsitute but as a supliment. right now im training to become a mechanic. in a month ill be taking atleast 2 ase tests and in a year ill be getting my inspectors license, all ive got to do is complete one more year in a garage.
