Staten Island, NY · Member since 2018 · 67 posts · 6 votes
Hello everybody, whom or what institution would be best to take a loan from for a mortgage; considering my credit is low and I don’t have a W2? Btw I’m looking to buy a deal with 16+ units.
@Michael Newman pretend for a minute you're in the lender's shoes you are talking to. You just said "I have no way of proving any income and I have a poor history of paying my bills, will you loan me a large amount of money to buy a large, valuable property?"
Also, I looked at your profile and see that you're young and likely don't have a ton of experience.
No one is going to lend you money based on that.
Now having said that, I don't want to be a wet blanket and I think there are ways you can make that happen IF you're willing to accept there will be a LOT of hard work on your part to make it happen.
Two things you can do 1) Find any properties near you that would work, find out who owns them and develop a relationship with them. 2) Start attending any local real estate networking groups in your area and get to know as many people as you can.
@Jeff Kehl
You speak the truth
I’m reading RichDad’s Ken McElroy’s book: The ABCs on Real Estate Investing. It’s the best book I have ever read. I know what actions I need to take to achieve my goals now. I learned more in this book so far than my past 3-4 months of research
E-commerce is a way to get cash flow to start, I just got a discover card so I may as well use the card to generate cash flow, that would be very appealing to a lender
@Jeff Kehl
Also I’d like to add that big multi families are valued based off their cash flow and that will be shown to the bank. If one bank denies me I’ll go to the next and the next and the next and so on until I get a loan at 6%
@Michael Newman Hi Michael, good to see you are passionate about REI and looking to close a deal. I had the exact feeling when I was in my early 20s. You got some part of commercial loan right, with 5+ units, some commercial lenders will not be as strict on credit or W2. Heck, you can even be unemployed to get a commercial loan, but here's the catch. They will all require a hefty down payment starting from 20% to 50%. So if you are trying to get a commercial loan at 6% with no credit or W2 and have less than 20% downpayment. You will just spend the next few years calling different lenders to get rejected. On the other hand, if you can come up with 20% to 50% down payment, then I am sure there are lenders who will gladly do a loan base on the financial of the property. The reason behind this is because if you fail to pay the mortgage, the commercial lender will just foreclose the property and sell it at a discount which is covered by your down payment.
@Leo Poon
Thank you so much for the information, this is what I was looking for. I have an investor who’d be willing to help with the down payment. What is the usual rate for commercial loans?
@Michael Newman The rate varies from lenders, but it is usually between 6% to 8% right now. Some lenders will hold the loan for 25 years and no ballon during the loan period, but most will have a 30 years mortgage that ballon in 5 years or 10 years, which means you pay a monthly mortgage as a 30 years term but you need to pay the remaining balance at the 5th year. Most investors will refinance with the same lender or a different lender at the 5th year. However, there is risk involved when the economy goes south or funding tightens, you will not be able to refinance or get funds at the 5th year. Therefore, you will get foreclosed on the property.
Hello everybody, whom or what institution would be best to take a loan from for a mortgage; considering my credit is low and I don’t have a W2? Btw I’m looking to buy a deal with 16+ units.
Michael
Don't take this wrong, but with all due respect, you'll need a ton of cash to buy a 16 unit property because you're not really bringing much to the table with beat up credit and no income.
Having said that, my suggestion is to do what numerous people have done in your shoes and that is get the 16 unit property under contract and then sell the contract. Do that a bunch of times with a bunch of properties until you get a ton of cash and by then your credit will season and you won't need the W2. There are more ways to make money in REI than buying. Be a bird dog and find deals for people. Investors will pay for those deals.