2 properties, I have which are both free/clear WITHOUT a job

[Isiah Ferguson]

Hey BP.

I was wondering is there a way I can refinance 2 properties that I have which are both free and clear WITHOUT a job. 

I looked into a hard money loan which based off an individuals' assets in total and it is a 30 year fixed but the interest rates are between 6%-10% depending on my credit score. I think the rates are too high. 

Do you guys have another way I can go about this ?

How to refi without a JOB ???

We live in 1 of the homes now me and my wife. 

I have 2 year W2 for rental income through my LLC but it does not reflect my potential income. I'm looking to rent an apartment and move out turn my 2nd home which is the townhome into a rental.

I’ll have a duplex rented and a townhome. Personally, I’ll be renting temporarily. For the Potiential rental income, both properties will bring in 2600 in total. From this point, I’m looking to refi both at 75%. I'll take the cash from both properties and buy a primary residence cash and take out a heloc. 

Am I being realistic when it come to lenders ?

[Chris Mason]

Originally posted by @Isiah Ferguson:

Hey BP.

I was wondering is there a way I can refinance 2 properties that I have which are both free and clear WITHOUT a job. 

I looked into a hard money loan which based off an individuals' assets in total and it is a 30 year fixed but the interest rates are between 6%-10% depending on my credit score. I think the rates are too high. 

Do you guys have another way I can go about this ?

How to refi without a JOB ???

We live in 1 of the homes now me and my wife. 

I have 2 year W2 for rental income through my LLC but it does not reflect my potential income. I'm looking to rent an apartment and move out turn my 2nd home which is the townhome into a rental.

I’ll have a duplex rented and a townhome. Personally, I’ll be renting temporarily. For the Potiential rental income, both properties will bring in 2600 in total. From this point, I’m looking to refi both at 75%. I'll take the cash from both properties and buy a primary residence cash and take out a heloc. 

Am I being realistic when it come to lenders ?

I did some envelope math at @J. Martin's event a few months back in response to a similar question and determined that in theory if your net monthly rental income is ballpark ~2.5x your monthly obligations [ personal PITI where you live + minimum payments on consumer debt obligations ], and it's packaged/submitted to underwriting correctly, your DTI will work out fine. You will be able to purchase/refinance up to that point which ~2.5x is reached. Since then we've closed a few for unemployed folks with no income (other than rental income), turning envelope math theory into actual practice.

In one case it was a deceased person's tax returns that were the basis for the rental income determination. The heir hadn't done tax returns yet that included income from the inherited rental properties, so we just used the tax returns from the dearly departed's trust. 

If you want to do a rough ballpark to see if you might meet this, pull up your most recent tax returns (or 2017 before you file them), look at net taxable number at the bottom of Schedule E, add back depreciation and mortgage interest, divide by 12, and subtract your P&I payment (we removed just the interest earlier, now we're including the P&I) to arrive at ballpark monthly true net cashflow, and compare to personal monthly debt obligations.

In your case, the strategy might be to find a local lender that'll entertain this, take out as much as you can using Fannie money, and only use hard money once you're tapped out of Fannie money.