No salary - large deposit - feasibility for someone coming back to the US?

Question

Hi all,

I am moving back to the US from London to go do an MBA. I'll have no salary and my credit history is just good (it was perfect 7 years ago, but haven't used credit as living in the UK).

I want to buy a flat in the Phili area, do it up and sell it right after 2 years. I can put 100K in deposit, how much leverage can i get knowing i have NO salary and I will be a student? I have flats in Europe, but all mortgaged so quasi impossible to use as collateral.

Any information or pointers to resources would be greatly appreciated

Cheers,

- JP

Trevor Ewen · Answer

@JP Larcheveque

The lending industry in the United States is tilted heavily in favor of retail buyers. Because we are in a post-crash/highly-regulated period of history, a retail buyer is typically defined as a person with a W2 salary who lives in their unit.

It's sad to say, but the residential lending industry is not particularly kind to people with savings, entrepreneurial plans, or 1099 incomes. Ironically, these are growing parts of our economy.

My recommendation is to consider partnering with another investor with a W2 income. They can apply for the loan, and you can still put in your part with the up-front capital, or any other value-add your provide. W2 people like myself are always interested in finding motivated people with a little more time on their hands... it helps us get into deals we normally don't have time for.

JP Larcheveque · Answer

@Trevor Ewen , thank you very much for this. That was my thought initially, until I saw a lot of spam coming from the biggerpockets sponsored posts "no deposit, 100K passive income, no problem!"...

It's interesting what you have to say about partnering with somebody else who would be taking the loan. My view was to always limit as much as possible the equity part of the transaction, and your plan would essentially do the trick.

I still have a few options to explore before finding partners - I am thinking mainly to take out 200K of student loans, I just need to see if the 7% interest would still make sense. I'll be studying 2 years in Phili which is exactly the time it takes for a tax free saving on a main home, partnering up with someone as a pure investment play would remove a bit of the juice from such a play am afraid.