BiggerPockets

Loan getting ability of my retired parents (potential partner)

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4 posts by 2 users

Jeff Thompson

from Shasta Lake, California

Apr 11 '12, 12:50 AM


Hi all,
I'm currently working overseas and want to come back and go to school and flip/invest on the side. I have great credit and healthy savings but when I quit the job there goes my ability to get loans so I could only flip and sell to cash out instead of cashing out with loans and converting into rentals like I want to. I'd like to do maybe one flip into rental a month at first.

I've spoke with my father, and he agreed to partner with me without financial compensation (although they'll need my help financially before to long anyways), but we're unsure if he'd help the situation much. Here's a rundown of their financials:

-My father gets $1190 social security and $127 for partial disability from the VA each month
-My mother gets $449 social security and about $500 from part time work.
-They own their home outright which I estimate as being worth at least $200k, but it's in a trust, so I'm unsure it counts.
-They also own outright their cars and only debt is about $500 on a credit card. (recently bought new tires)
-My father has been retired since 2008, but used to be a contractor and built many homes using bank credit. His credit score should be 800+.
-They have very little savings and investments, around $10k, which are probably in the trust.

So, thats $27,192 yearly income, $210k assets, $500 liabilities and excellent credit. Their property taxes and insurance are about $3085 yearly. DTI calculators show $770 of further monthly liabilities put them to 45/45, which is something like one $115k property financed at 80% LTV.

I'm planning on incorporating and going with permanent commercial loans after renters are in with lease to cash out, so i'll be able to show cashflow for each property, but of course those won't show up on the tax returns until the new year rolls around.

Is my fathers personal guarantee enough, or should I find another partner that would cost me some of my profits?

Thanks,
Jeff



Bill G.

Real Estate Investor from Springfield, Missouri

Apr 11 '12, 08:41 AM


First, I'd suggest you not put your parent's personal financial picture on the internet as much of it does not matter. No one here is taking a loan application....

Age of an applicant for a loan does not matter, it is based on income and credit for a loan amount. I made a 92 year old man a 30 year fixed rate loan! The source of income (SS) is counted. It appears they will qualify, but they need to talk to a lender.

If I were you I'd ask Josh to take this down, spilling all of that is not a good idea IMO. Good luck



Jeff Thompson

from Shasta Lake, California

Apr 11 '12, 11:34 AM


I guess that was too much info huh? I grew up in the days of the anonymous internet... If that center chunk could get cleaned out I would appreciate it. The point I guess was DTI calculators show they could afford only afford a 115K property financed with a commercial loan at 80% LTV.

I'm not asking if they qualify for one loan, its would we be able to get many of them in fairly quick succession before the income shows up on the taxes. I don't really understand how this works.



Bill G.

Real Estate Investor from Springfield, Missouri

Apr 11 '12, 11:49 AM


I doubt that since each loan closed will count against the DTI ratio. I'd suggest doing one and make some money and keep doing them until you work your way up. Good luck...

You can PM Josh, I'd take the whole thing down.



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