How Using Private Money For Real Estate Investing Preserves Your Credit

?I?m sorry Mr. Investor, but your credit report indicates that you have too many mortgages in your name. We are unable to grant your loan request at this time.? Words no real estate investor ever wants to hear, especially when a really great deal is on the line. Another great reason to begin lining up sources of private money for real estate investing.

Maybe you aren?t at the point yet where you have been turned down for a loan because you have too many mortgages listed on your credit report, but invest in residential real estate for long and you may find yourself faced with that exact scenario. That, or your debt-to-income ratio will grow ?too high? in the minds of most lenders.

?Debt-to-income ratio?? you ask. ?What?s that??

Great question. Debt to income ratio is normally calculated as follows? add up your total monthly debt payments, including loans, credit cards, mortgages, etc. Don?t include things like utilities, groceries and the like? just debts that appear on your credit report.

Next, add up your total gross monthly income from all provable sources. Then, divide income by debts, and the result is your debt-to-income ratio. As an example, if your monthly debt obligations total $2,000 and your total monthly income is $6,000, your debt-to-income ratio is 33%. The lower the percentage, the better off you are from a lender?s perspective.

Which brings me to the point of this article. If you can borrow private money for real estate investing that doesn?t show up on your credit report, lenders won?t include the monthly payment in their calculation of your debt-to-income ratio. Therefore, your credit- and your ability to borrow- won?t be negatively impacted by the loan.

Also, you?ll never come up against the limit some lenders place on the number of mortgages one individual can have on their credit at any one time.

This should make you very happy, because it means you will have more options when it comes to using your credit for other things, and more money available for investing. More money equals more leverage, and more leverage equals more deals, and more deals equals? well heck just MORE!

It?s an amazing thing about private money for real estate investing. Everything gets easier, because the financing gets easier. Makes you want to go out and get some for yourself, doesn?t it?

For more on how private money for real estate investing preserves your credit, visit

Need a quick jumpstart for beginning real estate investing? Tom Dunn writes “DealFiles – Real Estate Investor Stories”… stories of real investors just like you and their real deals. Why not check it out right now? It’s FREE!

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