Hello! Thank you to anyone who takes the time to read, respond and offer some helpful advice! My fiance and I are newbies at real estate investing. We started small by purchasing a duplex for 55K last summer with an FHA loan. At that time, my fiance was full-time as a mailman and I was a part time admin at a home nursing agency. As of September 2019, my fiance quit his full-time job to fully pursue our online Amazon business. I now act as an Amazon consultant full time as well as assist in managing our own business. As of April 1st, 2020, I was laid off my part time job due to COVID. We have 10K set aside strictly for our next real estate investment down payment that we wanted to purchase within 18 months of the last one. We found a duplex we want to move forward with, but our lender is telling us we won't be able to make any new purchases until we have been self-employed for two years and able to provide two years worth of tax returns.
Is this legit? Is there something we can do to get around this? It's not like we don't have income... We have our current rental income of $450/month plus we would then rent out the side we current live in. Then move to one side of the new one while also renting the other side. I'm assuming we need to get creative, so if anyone has experience with something similar, I would tremendously appreciate any input! Please let me know if you need any other info!
Thank you thank you thank you!!!
Take this for what it's worth, but as a landlord I won't even rent to someone who is self employed until they have 3 years of income that meet my minimum qualifications (3× monthly rent net income). The risk is much higher because if something goes south and your business starts failing your instinct will be to save your business and put off your personal obligations to pay rent/investment property payment. A W2 employer is generally stable enough to be wanting to hire help. Fair or not, that's how I view self employed. I will consider self employed with a cosigner or higher security deposit, because that reduces my risk of a loss. Consider a bigger down payment to help mitigate your lender's concerns. More skin in the game = less risk of a loss to the lender.
@Kelsey Illuzzi , generally speaking, 2 years is true. I have heard that Freddie has a product that can get you a conventional loan with one full year of employment and a tax return.
I would try a few different mortgage brokers. Brokers have relationships with many different lenders, and each has their own rules to a certain extent.
You can also try going the commercial lender route. Your down payment will be higher, interest higher and often times term shorter (combined means you need more cash up front and will pay more each month), but they may be willing to work more with you since it will be held on the banks books, versus being sold in secondary market where all the boxes must be checked.