Newbie Investor .... Seeking advice about financing options

Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes

I've been a part of the BP family since 2018 and am finally tired of life on the sidelines so I'm getting in the game. I've identified a multifamily property but am still a little green when it comes to financing options. I have several barriers that won't allow me to go the conventional financing route (left my six-figure corporate job to do real estate full-time). I have excellent credit (high 760s) but very little money down (about $60K available on credit cards, $10K cash).

My affirmation: I will own my first multi-family unit within the next 30-60 days. Help!!!!

Thanks in advance for the advice... I am doing it afraid ya'll but I am so excited about building generational wealth.

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Alex Ramirez

Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes

@Maureen Simmons that takes some courage to quit your job and focus on RE. I personally never felt ready to make a move until my wife told me "you are just wasting your time and our money" after sitting on the sidelines for longer than a year and just focus on "education". That's exactly what I needed to hear to take massive action. After 2.5 years (including my slacking years) I own a 12 unit, a 9 unit, 1 STR and I am a GP on 188 units and an LP in another 300+ units. I can tell you right now, you will never feel ready. A book that fires me up every time I read it to take massive action is "10x by Grand Cardone". Get on wholesalers buyer's list and analyze every single deal they send you. Go to meetups and seek for partners. Start a direct mail campaign and find an off market deal and find an equity partner that can bring the dollars or wholesale it for a 5-6 figure profit. There are so many things you can do. Let me know if you have any questions. Happy to help you.

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Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Paul Crosby II:

Hi Maureen!
What a leap of faith! That is incredible.
I would definitely suggest tax lien investing podcast from Bigger pockets. You might be able to leverage your cash and end up owning a property on the cheap.
In regards to using credit, you could use a secured loan on a vehicle or other asset but not unsecured debt.

I will say that typically lenders look at a 60 day window for your bank statement and dont go into much detail on why your cards are at their current limits.
Hey Paul!!!

Thanks for the vote of confidence and tips. I am looking at tax lien off market properties in a few states.
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Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Kristen Sonsma:

Depending on the value add opportunity, I would suggest bridge, DSCR, or a business partner. The more you network, the more you might see the value you bring to the table for someone else! Each opportunity might be different but I'd recommend building out all options.
Kristen
@harlingtonlane
I agree, Kristen!

I also love the idea of building partnerships, especially because it will take a team to accomplish my long term goals.
0 Reply
Tony Lee
New to Real Estate · Allentown, PA · Member since 2019 · 62 posts · 19 votes
4y
Quote from @Maureen Simmons:

I've been a part of the BP family since 2018 and am finally tired of life on the sidelines so I'm getting in the game. I've identified a multifamily property but am still a little green when it comes to financing options. I have several barriers that won't allow me to go the conventional financing route (left my six-figure corporate job to do real estate full-time). I have excellent credit (high 760s) but very little money down (about $60K available on credit cards, $10K cash).

My affirmation: I will own my first multi-family unit within the next 30-60 days. Help!!!!

Thanks in advance for the advice... I am doing it afraid ya'll but I am so excited about building generational wealth.

Welcome to RE world where you will make a lot of mistakes and become an expert at it! Don't need to be nervous! I was where you were 4 years ago, now still going hard at the same time try not crash during this upcoming Recession. Haha! I have couple recommendations that worked for me, might not work for you. But feel free to follow or use it later down the road if you like.
1) Apply for FHA since you quit your job. FHA will finance up to 4 units as long as you live in one.
2) Find a partner and start an LLC
3) Find lender that offer DSCR. It's very simple, or you can look it up on Google.
4) Find HML.
Hope these would help you start :)
1 Reply
Jacob Amaro
Lender · Los Angeles · Member since 2022 · 7 posts · 7 votes
4y
Hi Maureen,

What an amazing story! I️ wish you nothing but the best in your real estate journey! There are tons of different loan products that you could benefit from, even without the security of W-2 Income. Our team has been finding that many Non-QM products are more competitive than Conventional financing at the moment!
1 Reply
Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Tony Lee:

Quote from @Maureen Simmons:

I've been a part of the BP family since 2018 and am finally tired of life on the sidelines so I'm getting in the game. I've identified a multifamily property but am still a little green when it comes to financing options. I have several barriers that won't allow me to go the conventional financing route (left my six-figure corporate job to do real estate full-time). I have excellent credit (high 760s) but very little money down (about $60K available on credit cards, $10K cash).

My affirmation: I will own my first multi-family unit within the next 30-60 days. Help!!!!

Thanks in advance for the advice... I am doing it afraid ya'll but I am so excited about building generational wealth.

Welcome to RE world where you will make a lot of mistakes and become an expert at it! Don't need to be nervous! I was where you were 4 years ago, now still going hard at the same time try not crash during this upcoming Recession. Haha! I have couple recommendations that worked for me, might not work for you. But feel free to follow or use it later down the road if you like.
1) Apply for FHA since you quit your job. FHA will finance up to 4 units as long as you live in one.
2) Find a partner and start an LLC
3) Find lender that offer DSCR. It's very simple, or you can look it up on Google.
4) Find HML.
Hope these would help you start :)

Hey Tony!
You rock! Thank you for chiming in. So glad to hear about your experience. Honestly, the response to this post has been amazing. I wish I had taken the leap sooner but there's no better time than the present.
I have a few questions about one of your bullet points. I will DM you.
0 Reply
Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Jacob Amaro:

Hi Maureen,

What an amazing story! I️ wish you nothing but the best in your real estate journey! There are tons of different loan products that you could benefit from, even without the security of W-2 Income. Our team has been finding that many Non-QM products are more competitive than Conventional financing at the moment!
Hello Jacob!

Thanks for sharing your experience/knowledge. Let's connect! I'd love to learn more about non-conventional financing from your perspective. I'll send you a DM.
0 Reply
Jacob Amaro
Lender · Los Angeles · Member since 2022 · 7 posts · 7 votes
4y
Quote from @Maureen Simmons:

Quote from @Jacob Amaro:

Hi Maureen,

What an amazing story! I️ wish you nothing but the best in your real estate journey! There are tons of different loan products that you could benefit from, even without the security of W-2 Income. Our team has been finding that many Non-QM products are more competitive than Conventional financing at the moment!
Hello Jacob!

Thanks for sharing your experience/knowledge. Let's connect! I'd love to learn more about non-conventional financing from your perspective. I'll send you a DM.

You are very welcome! Would love to connect with you!
1 Reply
William Thompson
Member since 2021 · 1 post · 0 votes
4y
A friend of mine recently told me about Lima One Capital. May be a good place to start.
0 Reply
Jeff SchemmelBusiness Member
Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
4y
@Maureen Simmons I will do my best to work around the obvious! Hope some of this helps :) I bought my first house hack for $5,000 on a 130k purchase price. I'm not sure that's available to you there, but it was a condo and i rented the other room to a friend for $500. I think it's a great way to start and you usually get better lending terms on primary residences.

1.) I recommend house hacking. earn rent while offsetting one of your biggest expenses.
2.) drop the cards until you have a larger cash stack
3.) if you have a co-signer, get them onboard pronto - this could be your best option to buy a house hack.
4.) if you're in the business you likely know lenders pretty well at this point. Many lenders I work with are investment-focused and either are ready to lend privately or know plenty of people who do if presented with the right plan.
5.) ask these lenders about rolling your commission into the deal to lower your cost.
6.) use down payment assistance - there are likely some local programs for first time buyers. even if you've bought and sold once before....if enough time passes you can have this option again.
7.) use your FHA loan if at all possible.
8.) look for a contract for deed with good terms - this is a long uphill battle and you'll need to find the right seller and nurture that relationship - not quick or likely to see this come to fruition.
9.) explore rental arbitrage, but check with your broker first to see if they will allow you to be managing property while they hold your license.
2 Reply
Beena ShahPro Member
Realtor · Birmingham, AL · Member since 2020 · 23 posts · 13 votes
4y
@Maureen Simmons I had started my journey 14 years a go and had learned that no w2 steady income= no loan. I was fortunate to find a partner to go 50/50 on my first deal where I brought the talent and 50% and he only brought other 50% of money and trust in me. We took off on this good start to rent our first property out and borrowed against it to buy next and so on.Starting small helped me understand ins and outs of rental much better and then it got easy to buy our next asset. Just a thought that you may want to find 1 or 2 members to partner up with on your first one to get the ball rolling.
Good luck.
2 Reply
Tyler Solomon
Lender · Austin, TX · Member since 2022 · 223 posts · 244 votes
4y
Maureen, I think it is amazing that you are deciding to jump into the investment RE game - building generational wealth starts with a single step! Non Qualified mortgages such as a DSCR loan would be a great product for someone looking to underwrite based on their property cash flow and not their personal income (W2). I would love to answer any questions you have about products in this space. These loans are able to close much quicker than a traditional mortgage would be able to, which is a huge bennefit to buyers in today's market! Please feel free to contact me and I will be happy to help!
2 Reply
Debbie FalesBusiness Member
Lender · Annapolis, MD · Member since 2018 · 145 posts · 47 votes
4y
Congratulations on making this leap of faith, @Maureen Simmons! It sounds like you're well on your way. I second the previous suggestion to take advantage of Opportunity Zones, if you can. We have had several clients who have made this tax advantaged strategy work for them, and have posted some details on our corporate blog.
Good luck!
Debbie
[email protected]888-444-3160
Navigator Private Capital4.620 Reviews
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Chris Clasby
Lender · San Diego · Member since 2019 · 10 posts · 13 votes
4y
This may not be what you want to hear, but depending on how recently you left your job, I would strongly consider getting a similar job in a related capacity ideally with similar income. The reason has primarily to do with your goal of buying rental property as you will be much more finance-able and get lower rates with the W2 income, but more generally the combination of 1) no consistent paycheck 2) a new large debt burden and 3) limited financial reserves is a recipe for over-leverage.

Real estate is a fantastic asset class (as I am sure most here would agree!) but the only way to truly lose in this business is to become over-leveraged, and that means selling at a loss, BK, etc. Happy tenants are not a guarantee and if you're relying on rental income to make the bills and don't have a sufficient cushion, a 2-3 month vacancy (which can happen!) could be a major set back and potentially ruinous.

My advice is to always stay well within your means with real estate, so that consistent income will do wonders for making that happen.
1 Reply
Dennis Fridman
Rental Property Investor · Houston, TX · Member since 2018 · 2 posts · 1 vote
4y
@Maureen Simmons I don’t have any advice for you as I am pretty much in the same lane as you but man do I like your mind state. Keep grinding! Looking forward to hearing about your progress.
1 Reply
Account Closed
New to Real Estate · New York, NY · Member since 2020 · 16 posts · 6 votes
4y
Hi @Maureen Simmons!
I believe in your affirmation as I can resonate and your goals are similar to mine! I am all about creating generational wealth. Let's connect!
1 Reply
Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Account Closed:

Hi @Maureen Simmons!
I believe in your affirmation as I can resonate and your goals are similar to mine! I am all about creating generational wealth. Let's connect!

Hello Simran! So glad to meet a kindred spirit. Would love to connect!
0 Reply
Maureen Simmons
OP
Real Estate Agent · Oakland, CA · Member since 2018 · 24 posts · 54 votes
4y
Quote from @Dennis Fridman:

@Maureen Simmons I don’t have any advice for you as I am pretty much in the same lane as you but man do I like your mind state. Keep grinding! Looking forward to hearing about your progress.

Thanks so much Dennis! I appreciate the kind words.
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