Are no income requirement loans foolish??

Question

I am looking to buy 4 income properties in Kansas City. I was hoping to purchase 240k worth of homes with 120k financing the remainder.  I have no proof of income so I understood the 50% down requirement.  However, now I am seeing interest rates as high as 10% (!) and  4k in points too.  I am looking for reliable income, was hoping $500/property.  These no-income loan parameters seem to defeat income potential,  yet to buy two properties with cash does not maximize income potential.  What would you do?  With just 120k, (even with a credit score of 801),  maybe I should just go on a really nice vacation...yeah, right.

Andy Collins · Answer

4 points and 10% interest sounds more like hard money rates (but the 10% is good for hard money),,,I think you can find 6-7% from what I've seen.

andy

Account Closed · Answer

Buy four B class with your cash and you can get the 500 rents easy, if not more.  You can get a local bank to offer some product to pull cash out of these in 6 months to a year and buy more.  Interest is around 4 percent for this compared to 10, wow!  No Thanks!

Jeff Greenberg · Answer

@Timothy  Nelson.  You may want to look at commercial properties as lenders will be looking at your net work and liquidity in addition to the property performance.  Personal income is not as important.

Gordon Cuffe · Answer

10% seems high with that credit score. I know we have no income lenders with rates better than that but I am a lender in CA. I can check with them to see if they do loans in MO if you want me to .

Tyler Caruso · Answer

Sounds like your best bet might be to 2 of the income properties and pay cash for those.  10% interest and 4k in points is too much imho.

Jon Klaus · Answer

Partner with someone with income for an appropriate equity split?

William Robison · Answer

Hello @Timothy  Nelson

Welcome to Bigger Pockets.  You have an interesting set of circumstances, but there should be a few better solutions available at better rates.  For buy and hold properties, depending upon your risk tolerances, you may be able to find some multi-family properties in the Kansas City market areas to meet your criteria.  Finding a lender that is more forgiving on your circumstances will be the first order of business.

Feel free to contact me directly for a suggestion of a couple of options.