Is this feasible for me?

Question

I'd like to get started in real estate investing. Ideally short or long term rentals. I've got a 778, I own a house that I inherited when my dad passed, with roughly 350k in equity. I've got maybe 20k in cash. I'm a career bartender though that makes around 55k on paper. Do I have a shot at even qualifying for a mortgage with that income?

Benjamin Aaker · Answer

Are you attached to your house? You could sell it and purchase up to a 4 plex and live in one unit while renting the rest (house hack). This can use an FHA loan and you'd likely qualify and be able to enjoy a low down payment. With a HELOC, you could take about 80% of the equity out. Add that to your 20k in cash and you have 300k. You'd be looking at a commercial loan, as has been mentioned. This might be a challenge for you just starting out. Talk to a few commercial bankers in your area and you will get some solid answers.

Preston Dean · Answer

@Travis Call

What is a 788?

Yes you can for sure qualify for a mortgage with $55K on paper

MY SUGGESTION:

Go to the top of this page and click on FIND A LENDER there you will be matched with 3-5 lenders. I would suggest clicking on someone who has the most amount of posts or reviews that way you know they are active

Zeke Liston · Answer

You should be able to qualify for a loan. You'll likely want to cash out and refinance your primary residence to pull some cash together for a down payment. If you can't qualify for a conventional mortgage, you could consider a DSCR loan.

Maureen McCann · Answer

Hi Travis,

The best advice I can give you is to consult with a lender, explain your game plan, and ask what is needed to qualify for a 30-year fixed mortgage.  Many markets outside of Orange County and out of state offer investment properties between $100K-$200K.  I have a lender I can introduce you to who can help you understand what you qualify for.  Additionally, this same lender can run the numbers for you on taking out a HELOC on your primary to see if all costs are covered from your investment property. Feel free to DM me and I will connect you.

Congrats on finding real estate as your true wealth builder. You are not wrong. Cheers!

Peter Mckernan · Answer

You doing a house hack, or buying an investment? If you are going to live in it you can get qualified (of course check with a lender first). You can do first-time home buyer programs that will reduce the amount of money down, or you can take some money out of that property your dad left you to make the numbers for an investment work for you.

Robin Simon · Answer

Yes, you can start - just soak up info and take it pretty conservative to start.  Are you able to do the dirty work of a renovation for a flip or BRRRR?  If so, that would be a good starting out point as $20k can be enough with a hard money loan and a lower value property (although likely challenging in CA).

DSCR Loans are an option for turnkey and a refinance - there is no DTI involved in the qualification so salary does not matter

Travis Call · Answer

Luckily I do share this house with my sisters and their husbands, so if an FHA purchase and living in a house for a couple years is the only way, I may be able to swing that.

I'm fairly handy and have done many of my own repairs to this house over the years, so I'm fairly confident in my ability to be able to handle a slight fixer upper.  The only problem with that plan is that I'm located in Orange County and I'd imagine most properties out here are well outside my affordability.

Jonathan Greene · Answer

@Travis Call don't do what you did in the restaurant business in real estate, don't fly blind. Go slowly. DSCR just has higher rates and if you overestimate the rents and underestimate the repairs or maintenance, the deal goes south quickly. Right now, you just want to invest, but that's not a strong enough why. There is also no target right in terms of an asset, and you need that.

Travis Call · Answer

I've been at the same job for 3 years now and in the same industry for about 12 years.I do live in the house I own, As far as the HELOC, that was kind of my plan to utilize that as a down payment...ive been reading about the DSCR loans, why do you say I wouldn't be ready for that as a first timer? Would I have trouble qualifying or are they just more complicated?

Ive been taught some hard lessons in business already. I started my career in restaurants backwards, I opened a bar and restaurant at 27 with no experience and ended up losing roughly 350k after about a year being open. Since then, I feel like my risk assessment skills have gotten better and I'm finally ready to try again.

Is this feasible for me?

Most Popular Reply