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It depends on the lender, so that is a better question for individual lenders. I t also depends on what type of investing you want to do. Getting a loan from a conventional lender for a buy and hold will be more difficult than obtaining a hard money loan for a flip.
Employment is mandatory to get descent financing on investment properties. There are alternate options that are more expensive and higher risk but not reliable. It could take up to 10 years or more to grow to the point of having significant enough income to replace a paycheck.
If you want to flip you could be facing some very lean times without a job to support you or you would need deep pockets.
High paying consistent long term employment is the easiest way to successfully invest. This is not a fast or easy road to financial success.
@Dan D. Traditionally, you need to hold down a job for 6-months to a year to qualify for a traditional mortgage, but don't get discouraged my friend. Get creative! Start networking for potential partners, people who may have more capital or have a W-2. If you can provide them with a service (sweat)that they cannot provide them self or with a commodity (time) that they do not have then you may have the start of a beautiful partnership. Do not close your dreams due to an obstacle. Don't think outside of the box, think like there never was a box! Wish you the best my dude.
Thanks for the reply guys. I really appreciate it! As far as the creative financing, I am taking about 6 months to a year to get educated on creative financing and figure how this RE machine works. I'm starting the with no or little money down book authored by bigger pockets. I figured that would be a good direction to head. Any other books I guys would recommend?
Dan, Look up Eric Johnson at Inlanta Mortgage on Velp. He'll get you the answers you need and is very good at explaining the ins and outs of it. www.inlanta.com/people/eric-johnson/
Gavin thanks so much for the reply. I'll check this guy out.
Dan, in my opinion, that is NOT true! I am a full time real estate investor. I started flipping houses in 2007 with over $1million in debt, a $60k tax lien on my credit from the IRS, and no job...oh yeah, and a past bankruptcy (yep, a loser in the bank's eyes). Today, I'm a strong 6 figure earner and I take most of the summers off. That being said, of course I never even bothered stepping foot in a bank or mortgage office with my deals...LOL. Where there's a will and a work ethic, there's a fortune to be made and nothing can stop it. This is not a "get rich quick" type of business...no real business is...BUT, with proper guidance and good old fashioned grind, it can be an amazing way to build a life. I live in Freedom, and that is nothing more than a long walk to Green Bay, so YES you can do it in our market!
Hey @Jacci Konkle , would you mind expanding on what some of this "sweat" and "work ethic" and "grind" methods are? As a freelancer, banks aren't exactly excited about my profile... but I've got a nice nest-egg and a will to win, just need a direction to head in. Thanks!
Hey @Matthew Morris! It partially depends on what investing strategy you're looking to do. If you're looking to wholesale and/or rehab, some local "hard" money (I say local because it's cheaper than national) or especially private money are your very best avenues. If you're looking to hold rentals, you can still use these sources, season the property and refi with a lender that will base it on appraisal and cash flow! You can also JV with investors who have the money when you have the time and the deal. Why not see about buying "subject to" or on land contract, etc. There's SO MANY ways you can buy properties without banks and still net a killer profit and/or killer cash flow. One of my favorite things to do in this business is deal structuring...finding creative ways to fill the seller's needs and/or terms while still winning in your business as well. If we only stick to fitting in the box of offer, use bank, repeat...we lose lots of deals out there that could've been creatively structured to offer more to our sellers and still stick money in our own pockets. The "grind" is the daily discipline of putting your own marketing out there to get your phone to ring from motivated sellers who have a home or rental property they want to sell and have not yet placed it on the open market with a Realtor for one reason or the other. This is where the creative deals can be done and the biggest profits are found. It's also the most rewarding work we get to do!! Ohio is filled with amazing people and great REIA's. If you haven't gone to any of your local events, go and check them out. I bet you'll be able to connect with someone willing to do a JV (joint venture) with you or at least offer "softer" hard money to get you going!
What terms are you getting with your local HMLs? In my market, I actually use the national ones because my local guys were all charging 12% and 3-4pts.
@Nghi Le our local HML's are actually about the same. They are 0-3 pts and 12-15% depending on location and experience (and which lender you use), but there are no credit checks at all...just based on the property. Locals do not need appraisals either. With rental properties, the terms are much better, but do require appraisals. I'm a local HML myself now, but I encourage everyone to develop their own private money in their circles of influence and spend a little time each year putting on a class on how to do it. Setting up your own private lenders is far superior! Either way though, if the deal works, pay the money and move along. I once paid 4 points and 18% to close a deal. The lender came to my rescue the night before closing and offered me these scathing rates....I took it! If I had not been willing to pay him, I would've lost the deal, lost my earnest money, and lost my good name for not closing. In the end, he made a sweet return (he deserved it for saving me), and I made $36k NET on the rehab. I would pay any rate as long as the numbers still work. It always baffles me when investors get hung up on the cost of money when the deal works either way. If it's a long term hold, it makes a bigger difference, but a 3-6 month rehab is no big deal. Cheers to your next deal!!
@Dan D. yes you can do it but that doesn't mean it will be easy. What won't work well is going to traditional lenders like banks. It is not out of the question but banks love to find ways to kill deals. They will promise the world up front and then turn you down for something they new about from the start. Your best bet will be smaller local banks.
Better than banks would be doing creative deals like @Jacci Konkle (Hi Jacci ! ) suggests. Would you do a deal if someone put up the money and s;lit 50/50? You may find a partner that will do that. just as importantly though is, if you are willing to give up 50% of a deal to get the money to get it done, then hard money rates look cheap when you keep all the profit.
Hi @Ned Carey ! It's been soooo long since I've seen you! Hope all is well in Baltimore. I plan to come back out there sometime in the next year. I'll be sure to connect!
I am humbled by all of your replies and feel encouraged to keep steaming ahead. I appreciate you guys :)
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