We have access to $100k but no income. How can I start?

Question

Hi all! N00b investor here.

My partners and I want to get started with a career in BRRRR.

We have access to around $100k of cash between us, and good credit, but none of us can show substantial income on tax returns.

We are located in NY and Miami - expensive markets. $100k won’t even buy a distressed property let alone give us capital to fix it.

We want to get an FHA loan or something to give us leverage but I’m worried that without income we won’t qualify for a loan.

What can we do to get started in BRRRR? Is there a loan we can qualify for without income? Is there any way we can qualify for FHA?

Kevin Ellerton · Answer

Thanks for the tips guys I really appreciate it.

From reading BiggerPockets books & forums, it seems like most investors are able to get loans relatively easily. Does that mean most investors have "day jobs" that provide income, and only work on property investing on the side? Or are they using rental income to qualify for new loans?

Rick Pozos · Answer

Get out there and find some deals. Drive for vacant looking houses. Find the owners and ask them if they are interested in selling. It is called wholesaling. Find some investors who would be interested in buying that house for a little more than you can buy it for.

Learn from these investors that you have sold the houses to or at least talked to before. People with experience can be very valuable to you.

David M. · Answer

@Kevin Ellerton

Agree.  Kinda tough without income...

Sorry, good luck.

Brian G. · Answer

@Kevin Ellerton I suppose in theory you could buy a property at a discount using hard money or cash, fix it up and then sell it (ie flip). The challenge is you might have to do that from a distance given your local market which others have said is the riskiest thing to do in the biz (ie a remote rehab). Alternatively, you could invest in someone else’s deal locally on the lending side. However, it’s very unlikely you can buy a property cash or even with a HML and then get longterm financing on it to hold the property if there is no income to substantiate your ability to repay. After all, would you loan money to you and your friends if there was no verifiable evidence of the ability to repay and put your capital at risk? I would think not since the most important principle in investing is “Protect Your Capital”, ie do not lose money. Perhaps you could buy with cash or a HML, fix up the property, rent it out and then use a private lender to recoup your cash or pay off the HML but if you don’t have a proven track record of success OR a way to demonstrate your ability to repay that’s a pretty tough sell to make. Even finding/closing a seller finance deal would be extremely difficult for the same reasons. Things would be so much easier if you all find a way to jack up your income. Maybe others can offer a solution but I’m stumped.