what to do?

[youngun]

ok i know theres no right or wrong answer to my first question and im going to try not to drag this out too long so here we go:
Ok I know there’s no right or wrong answer to my first question and I'm going to try not to drag this out too long so here we go:
1. I’m 22 in about $30,000 personal debt and very interested in real estate investing. Been doing my research for almost a year now and feel knowledgeable enough to understand the processes of buying/selling/renting and even made a few offers. I’m sticking with mainly undervalued and foreclosure type properties. The problem is my credit score (low 600s) should I pay off my debt then get back into it with a better credit score, which is causing me problems. Other problem is I own my own business and I have a hard time showing income for obvious reasons. My other concern is I’m so stuck on trying to find deals where I live because I’m concerned to invest in something far away (wrong mentality?) and last but not least should I open my real estate corps now and put cells phones and credit cards to build the credit or should I just wait for my second investment property to do that? First one I’m buying as a first time home owner. Thanks for all the advice and sorry bout rambling just confused...THANKS

[TMCG]

first, welcome!

okay, you seem "a bit" all over the place.

what type of debt is your 30k?

you're 22 with a credit score over 600 so that's not bad actually.  again, that first question is important.

what is your strategy for taking control of your finances?

what do you mean, you have a hard time showing income "for obvious reasons" - even with a business, if you're making money, you should slowly start to see some kind of profit.  what type of business is it?

your first home will not be part of your business, unless you buy something in need of repair, buy it below market (by over 25% under value), and have a plan to live in it for two years, fix it up and sell it for a good profit...(owner occupied over 2 years = 0 capital gains taxes).  and even this type of initial investment is still not purchased through any business - it's your personal home.

keep personal expenses seperate from business expenses.

starting a company now just to have some CC's and "build credit" is something you should definitely speak to a CPA and corp attorney about.  the main reason to start a business is to make money, period.

if i were you, i wouldn't make any more offers until you know what you want to do.  if you do make offers - make them significantly below market and definitely consult an attorney.

good luck! keep in touch

[youngun]

Thank you and yes i am pretty all over the place right now between my business and trying to enter the world of real estate investing. My 30k is broken down to: 11k truck loan, 6k motorcycle loan, 8k credit card debt, and about 6500 school loans. Im selling my bike and my car to help boost my credit score, im either going to buy a real cheap car or lease something cheap to help my credit. I own a Hollywood Tans, its a pretty big tanning franchise, and i have one open and am going to open a second one, already bought the rights so i dont have to show income for two years the way my accountants set it up, i just take a draw. I cant afford to buy a home yet so i wasnt planning on living in my first property, the only way i think i could do that is if i bought a duplex and rented half of it out. Otherwise i was planning on my first home to be an investment home. Thank you very much for your help its very appreciated

[Roger J]

Real estate investing is a business in and of itself.  You need to think long and hard about starting another business before your first one is successful enough to run without you.  It's VERY difficult to be good in two different businesses.  More so if they are both startups as both will require more time than you physically have to give.

There is no such thing as a first time homebuyer investment loan.  First time homebuyer loans are limited to first home buyers buying THEIR personal property, not an investment.

If your CPA is doing it legal, great.  However, I don't really understand completely the "don't have to show income."  If you have an income, you do have to show it.  I understand that most businesses have alot of write-offs in the first few years and that's great IF it helps you.  However, if getting loans is something that you are going to need to be doing, then showing a loss in a business where it's your only source of income is a BAD thing.  Explain this to your CPA and see if his answer is different.

Raj

[benjiej]

I am not an expert by any leap of the imagination so what follows is my personal beliefs.

Before you can run your business finances you must be able to control your personal finances. If you are 32k in debt spend the year cutting that down to next to nothing or even better nothing. Over the last 2 years I have gone from 67k combined debt (spouse as well) to less the 2k. My credit score is almost 700 so it does payoff in the long run. What it takes is discipline which you need to run your profitable business anyway.

My 2 cents

Benjie