Need advice with financing

6 Replies

Hello BP, I'm new to these forums and could use some advice. I own some land with a mobile outside of Austin that has about 75k in equity. My wife and I are wanting to get started in REI by buying a house (single or multi) in the 250k range that we could live in for a short while before turning it into a renter. During this time we would rent our mobile out too.

I have enough to be able to make a sizable down payment and still be able to add value to the property. My problem is financing. I am an independent contractor and I'm not able to prove much work income for the past two years. Although, I have a stock portfolio that has been mildly profitable and I have supplemented my income with stock sales. Can I count this as income for loan approval? Can I get a line of credit based on the value of my portfolio? Any advice is appreciated, thanks!

I think you would have trouble with this approach because the potential value of your portfolio is always zero in a market panic or some other severe downturn. It is rare that real estate, by contrast, is ever devalued to zero, as even the land usually has some intrinsic value (there are exceptions, obviously). Banks are primarily interested in your ability to repay the loan, as they have no interest in taking control of the collateral offered, and if you can't prove a secure stream of income you are going to have to have a very large equity position in the property such that the bank would stand to make money either way and would have your equity as collateral against default. 

@Dare Lamberson Are you looking at only bank financing? You may be able to find alternative financing at a slightly higher rate that doesn't factor your income in as much - the thing I would caution you about that is that you mentioned you wanted to live in it for a short while. Most non-conventional lenders won't lend on owner occupied property as the disclosure requirements and regulations are much greater. 

@Dane Reynolds , There are plenty of hard money lenders out there that will lend you what you need with out running credit scores or even checking any bank statements or other like documents. Some will lend base on the deal, your personal experience, or even against your personal assets. 

So dont let that get in your way. There are plenty of legit, honest hard money lenders out there that can get the deals done!

Thanks for the input @Jason Hirko @Jd Martin and @Austin Pitts

So, as with everything, this raises some more questions. My goal is to have moved into a SFH before next May. I'm trying to figure out my business plan for making this work.

With the BRRRR strategy I can put 20% down in cash and use a private lender for the rest. Make any repairs, then rent it out. When it's rented then I refinance with a conventional loan (using rent income for approval?). Then get a HELOC to use as a down payment for the next house?

I'm looking for a way to maybe move into this first house and make the second house the rental property. My problem is getting refinanced with a conventional loan for the first property. If I move in and do the repairs can I get an appraisal (after about 6 months) to gain that equity? What's the best exit strategy from the PML? The longer I keep the loan through the PML the more interest I'm paying on that. Also, keeping in mind I own another property with ~75k in equity that will be a renter when we move out. Thanks!

@Dare Lamberson it takes up to 2 years for rent to be considered income as far as regular banks are concerned, so be aware of that as well. But you are probably going to be hard pressed to find a private lender to lend on your own primary residence, at least legally. 

@Dare Lamberson

Do you have any real estate experience as a landlord? There are banks that would consider that while making you a loan. If you are a Veteran there are programs out there for it. How about fha? What is your credit score like? There are a myriad of choices. I wouldn't talk to a hard money lender unless you absolutely needed to do it. They are called hard money lenders for a reason. I have used hard money lenders many times before but the cheaper alternative are not hard money lenders. Have you spoken to a good mortgage broker? If not pm me and I will give you some really great ones. As a real estate broker I have come across your situation before. Don't fret, yet. 

If you have experience then I would consider a duplex so that your carrying costs would be lower than a sfr. If you don't want to deal with the nuisance of being a landlord then reach out to someone like me for property management or leasing. 

Selling stock is considered capital gains. I am dealing with that issue right now and trying to convince this really good va mortgage broker that I have a ton of experience in flipping houses. I flipped a house two years ago and I wrote off alot of expenses for my business given the nature of flipping a houses. Thus my income isnt great but my capital gains was super high. I held onto it just long enough to avoid the income tax. Now I am dealing with that treatment of income with buying a fourplex. It will work out though.

Pm me and I will put you into contact with some good folks that might be able to assist you.


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