Arlington, TX · Member since 2014 · 68 posts · 7 votes
my situation is a bit odd.
I haven't worked in the U.S. For 3 years and I'm moving back in May 2015.
I'm dedicated to real-estate. I'll need financing for a 3 or 4-plex , but I don't have recent work history in the U.S.. I don't want to wait to have two years of work experience to finally get approval for financing. So, what are my options? As I see it, seller financing, a portfolio lender, or a private loan may be the only ways.
What does everyone think? Am I completely forgetting something in all of my real-estate studies thus far?
Investor · Maui, HI · Member since 2012 · 232 posts · 96 votes
11y
Would it be possible to house hack and do an owner occupied? Do FHA work with expat income records? I don't know the answer to these question but maybe it is worth looking into. Since you are looking for multifamilies only up to 4 units. What did your lenders say?
Arlington, TX · Member since 2014 · 68 posts · 7 votes
11y
Thanks for replying @Nazz Wang ! FHA was my first idea but I haven't given serious consideration to using my overseas income as weight to throw around. I'll see if I can get that answered somehow. I'm still in Japan, so having serious meetings is diffucult. Thanks again. :)
Depending on your exact situation, it's definitely possible to use foreign source income to qualify for a conventional loan.
Have you given any thought to buying a property remotely before you move back? I'm going through this exact same process - buying in TX remotely from Japan. I was able to get pre-approved for a Freddie loan with Japan based income. If you're a US citizen (as opposed to green card holder), Fannie can work also.
Give me a shout if you ever want to chat. Where in Japan are you?
Lima, Lima · Member since 2014 · 59 posts · 11 votes
11y
I have spent most of my life working as an expat. You are still required to file your tax every year so foreign earned income should be perfectly fine. The real issue is if you have a job when you return. Near impossible to get a traditional loan without income coming in. If you are still working overseas you might want to buy before you leave your job and before you alert your employers that you are leaving.
I haven't worked in the U.S. For 3 years and I'm moving back in May 2015.
I'm dedicated to real-estate. I'll need financing for a 3 or 4-plex , but I don't have recent work history in the U.S.. I don't want to wait to have two years of work experience to finally get approval for financing. So, what are my options? As I see it, seller financing, a portfolio lender, or a private loan may be the only ways.
What does everyone think? Am I completely forgetting something in all of my real-estate studies thus far?
HI Zach,
All you will need is a qualifying credit score 2-3 tradelines with 12 month history to show you have sufficient credit repayment history. This may be hard if you have not used credit lately overseas?
Secondly you will need 25% down with respect to conventional financing since you can use rents from the other 3 units to qualify your property for you. You can only use 75% of the gross rental income from the other units. So if you dont have any personal income you will need the rent to price ratios to work out so that this formula will qualify the entire mortgage/tax/ins of the property you're looking to buy.
Example above for orange county will not work, but for midwest might due simply to higher rent to price ratios of mid west versus subpar RV ratios in OC, california.
In CA gross rents are .3 to .5% RV ratios while in the mid west you can get 1.5-3.0% RV ratios a star difference. What does this mean? It means you can rent for so much simply that its enough to qualify the property in and of itself.
so in review get a qualifying credit score or build it, acquire or raise the money for the down payment or JV with someone with the capital and you can qualify.
Miami, FL · Member since 2012 · 612 posts · 189 votes
11y
Lenders are going to be much more interested in future income rather than past. If you are not staying in Japan then that income source is drying up - unless you will be working remotely. Your best bet would be to get a job that has a signed contract. This would be proof of future income. Additionally, the higher the down payment, the better you will be.
I think I understand both of your points, but I'm struggling with finding traditional work and fear that working a regular job will make me feel as if I don't have time for real-estate. I don't want to be the person who never stared because he got comfortable in his job.
@Nazz Wang Yes, house hacking is my main goal for my first buy. At first, I'll be living with family. But, I'd like to go for the FHA loan, occupy one unit, and follow that model. I haven't met with anyone yet as I'm still months away from that project. Not having a job may make that difficult.
I'm considering partnering with my father using his credit to secure the property to both our benefit. In that case, the FHA loan wouldn't work though. :)
Thanks again, everyone. Overall, I feel more and more that traditional financing may be unrealistic for me. Which I have to be fine with if I'm of the investor attitude.
Lender · San Antonio, TX · Member since 2013 · 39 posts · 15 votes
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Konnichiwa Zachary,
If securing a day job isn't on your to-do list when you get back to the states, I would suggest looking into asset based private lenders. Being able to pay points on the back end of a fix/flip can really help when money is tight, and because the loan is secured by the property, not your credit, etc. you have the ability to still get into real estate investing without the ideal W2.
Miami, FL · Member since 2012 · 612 posts · 189 votes
11y
Sure, you could use non-traditional financing, but without a steady job, how will you afford the repair/renovation/utilities/taxes/insurance/lawn care etc etc etc. Investing in real estate is a great way to build wealth, but unlike wholesaling, fix and flip takes money to make money.
Arlington, TX · Member since 2014 · 68 posts · 7 votes
11y
@Daniel Fleming Thanks for your comment! I feel like private lending based on the asset is what I have to shoot for. I'm just not very marketable due to not being an active graphic designer in the U.S. and only doing a bit while in Japan. Something I didn't think I'd regret.
I'll see what I can do with private lending, owner-financing, etc.
@Simon Campbell I do have money saved from these first 3 years of my post-college working life. So, I feel I would perhaps have enough to cover capital expenditures during that first year. Also, I do have a side business as an online English Instructor here, which I'll continue to do stateside, hopefully more and more. I certainly see your point and I'll make sure I don't forget it.
Hopefully I could wrap initial repairs into the loan or negotiate down to compensate and make the first couple of years fairly low-maintenance.