How to Refinance and Cash Out with Bad Credit | Mentorship Monday 100

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doing a cash out refinance when you got

back what's going on YouTube so before

we get in today's video I got some

really exciting news for you guys

we're coming up on our 100th mentorship

Monday which is incredible thank you

guys for submitting all those questions

to help me at the roaster group calm for

me to answer here on YouTube page I'm

eternally grateful for all that support

for me to have content to produce for

you guys and as a thank you and is a

really awesome way to celebrate with you

guys I'm gonna have our 101st mentorship

Monday on June 4th that's gonna be live

I'm gonna do it live here on the YouTube

channel Juna 4th it's 3 p.m. Eastern

Standard Time June 4 3 p.m. Eastern

Standard Time you have to be here on the

YouTube channel so you can watch live

mentorship Monday

I'm gonna answer lots of questions I'm

gonna have some special guests and I

just finished a book from BiggerPockets

calm on how to raise private money the

book just got finished it gets launched

in July but I'm gonna do some free

giveaways of the book here on the year

on the jinan the at that event you got

to be there I'm gonna do some other free

giveaways and like I said I'm gonna have

some special guest with me too so you

guys need to check this out it's gonna

be a great event

with lots of freebies and lots of really

cool things we're gonna do and get into

some questions and everything it's gonna

be it's gonna be a ball you guys need to

be here June 4 3 p.m. please be there I

look forward to seeing you guys then

what does happen in YouTube thank you

for watching mentorship Monday today's

question comes from Damian from Boston


what's that Damian got himself a

deal man he bought him cheap on a 2 flex

put a hundred grand into it and for

renovations didn't say how he got the

money said we don't know if that was

borrowed late from a private investor or

if there was his own capital or whatever

we don't know but all we know is Damian

demon came up with a hundred grand and

put it into this duplex and he said he

didn't pay much for the property which

means any water from spawn or which

means equipment feed might be saying it

nicely but maybe his father gave it too

long or maybe you know sold it to him

for a couple of grand or whatever to

help his son out so you got a very nice

dad there Damian so you didn't put a

hunter grand of the place in Damian says

the properties for 180 K now like what

I'm hearing so far Damian I have a

monthly net income of three thousand and

eighty dollars now I'm assuming because

Damon says net income

that means after expenses after

real-estate taxes after utilities after

management fees if he's not managing

himself after whatever else he's paying

he's making three thousand eighty

dollars which is awesome that is

phenomenal for a property's worth one

hundred eighty K that is probably beyond

the two percent rule that we talk about

a bigger pocket so I talked about your

YouTube page so awesome awesome

phenomenal deal Carolyn it's all looking

sunshine for Damien except for he's got

a problem here

I'm trying to do a cash out refinance

but he's having it hard to do so because

he has a little credit score who had

suggested you to get money out to buy my

next rental so Damien's got a great

property that's got you know he's only

into it for a hundred it's worth one

hundred eighty so he could refinance it

and pull all that capital back out or a

place to private money alone if that's

what he has and set all that up so that

he can do his next meal the problem is

he doesn't ever get credit score and the

bank is gonna want to lend on credit

some like private money lenders from

money lenders are just gonna lend on the

asset on the property and charge a lot

more interest a bank is going to charge

you a lower interest and it's gonna want

to is going to want to lean a loan to

you if you've got good credit and also

if you've got a good asset that they can

put a lien on so problems diamond

doesn't have a good credit so what does

he do alright a couple options you got

gaming if the property is in an LLC

we're going to do is just give a little

bit of the LLC away to somebody but a

bottom line if for any scenario may give

you is you're going to need a sponsor

which is someone who's going to step in

and step alongside you and personal

guarantee the loan put their own credit

score down there and they probably

hopefully have way better credit than

you do and they will step in as a second

owner alongside you in the bank will

look at their credit and then the

property and give you the loan okay so

that's that's what you're going to have

to do is to give some ownership away the

property to somebody know what do you do

with your own LLC when you give them

some ownership to the operating

agreement of the property if you own it

in your own personal name and you're

gonna have to move it out of your own

name most likely into an LLC so you

either get it into an LLC or if it isn't

an LLC then just give that give that

party some ownership of the of the

company through the operating agreement

and then you'll walk into the bank and

you can refinance it at that point now

the bank's corner to see them have

probably somewhere between twenty to

twenty-five percent at least of the


to be considered to be a significant

owner of the property I mean you could

ask them to buy that ownership from you

but they are putting a lot on the line

by personally guaranteeing the mortgage

for you and laying their credit score on

the line so maybe it's not a

dollar-for-dollar buy-in but you are

giving them some value no this $3,000 a

month that you're making on the property

so do that's one way you can go with it

the other way you can go is try and find

yourself a non-recourse lender you look

on bigger pockets just searching the

forums on bigger pockets for

non-recourse lenders your rates are

gonna be somewhere around like 7% 8% but

some of them are going to want to check

your credit - it's just for non-recourse

that means we're not going to hold you

personally accountable for the mortgage

they're only going to go after the

property if it goes upside down and

they're not going to give you like an 80

percent loan to value they might give

you sixty percent loan to value so

that's some of the way you can go with

it if you don't want to give any of the

ownership away a little bit uphill

battle and a little bit of a scrape and

claw to make it happen

so those are two options the the other

thing I would say to you Damon is you

gotta get your credit score up if you

want to be full time in this business or

want to do more real estate stuff and

this goes to everybody if you guys have

bad credit

there are ways you can get your credit

up you can if you even if you got like

really bad stuff like bankruptcies

sometimes time is what you need to cure

those things but if you owe money on

back bills or if you owe some back

invoices to people or just a phone bill

from 10 years ago or whatever just pay

the bill pay get it off your credit you

know and I just you want to call that

who that person on your credit score is

by the way get your credit score its

first thing you like to is get your

credit report and call those people that

are dinging you with bad reports and say

hey listen if I pay you something will

you remove this when your reported to

the credit bureau is being you know paid

off and absolved and then will you make

your credit score a lot they might be

willing to take a short a lower paint on

my vo you know 300 allas to the phone

company they might take a lower payment

you might offer 150 and they'll take it

and remove that from your credit report

so somebody had to pay the piper

and you got to pay those back bills and

that will make that's the best way to

make your credit score go up okay so

you're not going to get very far in this

business with low credit unfortunately I

know it's not fair but it is what it is

and that

that's what I see missing you Damien the

diversity of folks watching just got to

get your credit up to be a long term in

real estate so Damon thank you thank you

guys for watching send your questions to

help me after or group calm and I will

answer them right here on the YouTube

channel for you everybody else check out

thank you for watching guys as I always

say do you have a great profitable week