What to do when you have excellent credit but cannot show income.

Buying & Selling Real Estate
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What to do when you have excellent credit but cannot show income.

Glenn Martin
Member since 2018 · 17 posts · 1 vote

I have four properties, two in NYC and two in GA (one is my home and one is self-directed IRA). Collectively, they're worth $1.3 million, all paid in full. But, I recently left my job to do consulting and I have less than a year as an entrepreneur. Hence, I cannot show income or qualify for an investment mortgage. What do I do, given that I want to continue to buy properties for passive income? I've looked at hard money no doc loans. but 1.) seems a shame to go that route when I have so much equity and credit score of 830 and 2.) it's EXPENSIVE and leaves little room for profit. Any ideas?

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Ellis HammondPro Member
Investor · Leawood, KS · Member since 2017 · 178 posts · 108 votes
8y
@Glenn Martin Look at bigger deals (5+ unIts). The cash flow of the property is more important than your personal cash flow and if you have a lot of liquidity in your properties that will help also.
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  • Raul R.
    Rental Property Investor · New York City, NY · Member since 2017 · 493 posts · 386 votes
    8y
    @Glenn Martin I think your best option is finding a partner that is able to qualify for conventional loans and you can leverage your Existing Equity.
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  • Glenn Martin
    OP
    Member since 2018 · 17 posts · 1 vote
    8y

    That's helpful feedback, @Raul R.  Thank you.  Alas, who to trust as a partner?!? ;-) 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    8y
    Originally posted by @Glenn Martin:

    I have four properties, two in NYC and two in GA (one is my home and one is self-directed IRA). Collectively, they're worth $1.3 million, all paid in full. But, I recently left my job to do consulting and I have less than a year as an entrepreneur. Hence, I cannot show income or qualify for an investment mortgage. What do I do, given that I want to continue to buy properties for passive income? I've looked at hard money no doc loans. but 1.) seems a shame to go that route when I have so much equity and credit score of 830 and 2.) it's EXPENSIVE and leaves little room for profit. Any ideas?

    If your net monthly positive cashflow is 2.5x your personal housing expense plus all other non-mortgage consumer monthly debt obligations, and you are buying cashflow positive real estate, you can get a normal Fannie loan. Gotta find that 1 in 100 loan originators that'll actually review your paperwork and do the math to confirm; most will laugh at you right before hanging up. Your local REIA might be a good resource to find that LO.

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  • Glenn Martin
    OP
    Member since 2018 · 17 posts · 1 vote
    8y

    Thanks, @Chris Mason. I appreciate the response and suggestions.  

    0Reply
  • Diana Muresan
    Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
    8y

    Partnering up with someone who could take a conventional loan is not a bad idea. The other option is to do a non agency product, such 12 months average bank deposits or asset depletion or DSC (debt service concerage) where 90% of the rent covers your total monthly payment 

    1Reply
  • Ayne C.Pro Member
    Rental Property Investor · Tampa, FL · Member since 2018 · 251 posts · 124 votes
    8y
    @Glenn Martin is a HELOC not an option?
    0Reply
  • Anthony Rodriguez
    Specialist · St Petersburg, FL · Member since 2017 · 62 posts · 34 votes
    8y
    @Ayne Cardona I’m in THE same boat as you. 1099 in a year with THE 800 cREDIT SCORE. I had one bank look at my finances but ended up not qualified. I asked for a review and even a HELOC, but, the HELOC goes through the same review process. I’m debating on finding a deal where owner finances or acquiring a hard money lender.
    0Reply
  • Ayne C.Pro Member
    Rental Property Investor · Tampa, FL · Member since 2018 · 251 posts · 124 votes
    8y
    @Anthony Rodriguez Oh shoot, I did not realize that.
    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    You can get a high equity line of credit (HELOC) using your existing properties as collateral. That will free up plenty of cash to qualify for another loan or three.

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    1Reply
  • Ellis HammondPro Member
    Investor · Leawood, KS · Member since 2017 · 178 posts · 108 votes
    8y
    @Glenn Martin Look at bigger deals (5+ unIts). The cash flow of the property is more important than your personal cash flow and if you have a lot of liquidity in your properties that will help also.
    2Reply
  • Glenn Martin
    OP
    Member since 2018 · 17 posts · 1 vote
    8y

    Thanks, @Ellis Hammond. that's actually a great idea.

    0Reply
  • Glenn Martin
    OP
    Member since 2018 · 17 posts · 1 vote
    8y

    @Nathan Gesner @Ayne C. @Anthony Rodriguez Yes, HELOC goes through the same scrutiny. I'm sitting on $1.2m in equity and cannot get access, though my business is doing well. They want to see two years of business income. Any other ideas, folks? Thanks, again.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    Hard money lender

    Private money lenders

    Partnerships

    Family and friends

    Save

    Be patient

    The DIY Landlord Book4.7243 Reviews
    WebsiteView Page
    2Reply
  • Glenn Martin
    OP
    Member since 2018 · 17 posts · 1 vote
    8y

    Thanks again @Nathan Gesner

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