I got the Real Estate Bug and the problem I'm having

5 Replies

Hello,

I am an out of state investor and started to investing in Las Vegas from California.

I purchased my first rental property SFH and cash flowing around 138 a month without PM( I should have factored in PM before I ran my numbers but I didn't )

Anyways, I am itching to get into a second property, but since I am a self employed person ( I own my own fitness company) my debt to income ratio is capped ( self employed = look poor on W2) 

I bought Brandon turners book how to get into real estate with low to no money down, and looks like my best option is OWC. However all the deals I've been presented are like. 

5% down, 7% interest with a ballon after 5 years, so paying mostly interest and then refiance into a mortgage with pretty much what the asking price was. 

I can't find deals since I'm out of state and not a realtor ( no MLS, no Driving for dollars, wholesellers want usually all cash)

I can't get home equity line of credit because I only have 20% of equity in my current property. 

Partners, I am not a fan of because I've always been a do it myself guy and would hate to get in a tiff with someone, unless it was a silent partner/capital partner of sorts. 

Hard money same as owner will carry but worse. 

What other options do I have? 

I make great money, my business is successful and has been successful for 8+ years and even more so even the last 3+ years, most banks don't do stated income, I can't work with a porfilo lender yet correct? I need more than 1 property.

I can't get into commercial... ( i would prefer not to get myself into a pickle with 5+ units and have it sit vacant and pay the mortgage out of pocket, too much risk for someone just starting) 

I guess wait till my next w2 k1 and show more income this year and buy up a few properties, but then I feel properties will be higher than what I want to spend and interests rates will be higher too.

Find a lender who can look past the fact you make yourself look poor bc of being self employed.  Thats what I had to do. 

Good luck

Brandon-

You don't need any specific number of properties to work with a portfolio lender.  All a portfolio lender means is that they keep their loans in house, as in not selling them off to Fannie and Freddie.  Portfolio lenders will have more flexibility in their lending standards than the big nationwide banks.  You should try to find some.  

Also, you can get a commercial loan even if you aren't looking at more than 5 unit properties.  In fact, based on the fact you don't have traditional W2 income, I think you should be looking for a commercial loan (from a portfolio lender).  A commercial lender will look more at the income producing potential of your asset versus how much money you make.  Your credit, reserves, and the types of properties you are looking at will all factor in as well.  But, there's nothing saying you can't get a commercial loan for properties under 5 units.  A lot of people on BP advertise this exact kind of asset based lending that may suit you well.  

thanks for the great info! 

Another option is starting very low cost, high cash flow areas where you can get into a house for the same price as a down payment in other markets. There are several markets in the Midwest that have homes in rentable condition for $30,000.

If you can find a lender to work with you,  that opens up your choices, but many investors have been happy in Indiana, Tennessee, Missouri, ohio, etc.  My latest choice is  kokomo, indiana. 

(We 've actually sold out places in Las vegas recently, to buy in Indiana, since the cash flow is much better. )

Good luck to you!

Originally posted by @Brandyn Duff:

Hello,

I am an out of state investor and started to investing in Las Vegas from California.

I purchased my first rental property SFH and cash flowing around 138 a month without PM( I should have factored in PM before I ran my numbers but I didn't )

Anyways, I am itching to get into a second property, but since I am a self employed person ( I own my own fitness company) my debt to income ratio is capped ( self employed = look poor on W2) 

I bought Brandon turners book how to get into real estate with low to no money down, and looks like my best option is OWC. However all the deals I've been presented are like. 

5% down, 7% interest with a ballon after 5 years, so paying mostly interest and then refiance into a mortgage with pretty much what the asking price was. 

I can't find deals since I'm out of state and not a realtor ( no MLS, no Driving for dollars, wholesellers want usually all cash)

I can't get home equity line of credit because I only have 20% of equity in my current property. 

Partners, I am not a fan of because I've always been a do it myself guy and would hate to get in a tiff with someone, unless it was a silent partner/capital partner of sorts. 

Hard money same as owner will carry but worse. 

What other options do I have? 

I make great money, my business is successful and has been successful for 8+ years and even more so even the last 3+ years, most banks don't do stated income, I can't work with a porfilo lender yet correct? I need more than 1 property.

I can't get into commercial... ( i would prefer not to get myself into a pickle with 5+ units and have it sit vacant and pay the mortgage out of pocket, too much risk for someone just starting) 

I guess wait till my next w2 k1 and show more income this year and buy up a few properties, but then I feel properties will be higher than what I want to spend and interests rates will be higher too.

 It may be true most banks don't do stated income.  But you don't need most, you just need one that does.  There are definitely banks that do that.  If you prefer someone else to find it, get a mortgage broker to find for you.  S/he doesn't charge you until you close a loan.

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