Self Employed Lending Options

[Jewel B.]

I am self employed and curious as to my lending options.

I file my taxes and claim all my income and make my deductions.

I will be using 2021 and 2022 tax returns.

I am 100% owner of an LLC S-Corp.

My self employed income starts in 2021 and my LLC was founded January 2022.

I have a business credit card and bank account.

My income when working is consistent and predictable. However, the hours I work are inconsistent (by choice) as I do freelance and contract work (no 1099) and like to travel etc. My 2021 and 2022 incomes however are consistent with one another.

My 2021 income also includes a fairly small amount of W2 income, as well as some stimulus check and unemployment BACKPAY income. (I returned to work August 2020)

I will be working regularly from later September 2022 through the foreseeable future, so I will have bank statements to provide.

I will be filing my 2022 tax returns in February so I would be looking at more conventional lending in March.

I make quarterly estimated tax payments.

Credit score high 700s. No debt.

I am looking for either SFHs (STRs, MTRs, Section 8, student housing) or small MFHs (student housing, MTRs, LTRs).

Locally, I'm in Allentown, PA. OOS I would be looking primarily at NC, possibly WV, at this point (Midwest and South).

I'm foremost interested in STRs, MTRs, and student housing.

What types of loans am I looking at for my situation?

[Nate Sanow]

Most hard money lenders do not care about personal income, they value credit and the asset / how good the deal is. They are short term loans…if needing long term, look into non QM which also doesn't need a tax return, and most DSCR do not either…there are several national large companies that will do most or all 50 states, fairly easy to find and a good subject to research. I'd name names, but not wanting to seem like promoting specific ones or being a broker (I am not a lender) but I am available to share privately.

 I wish I knew about them sooner, would’ve saved me some time wasted being loyal to previous employers, thinking I needed a good job to invest. Loans really  are readily available when you have a deal, not when you have a job.  

[Ash Hegde]

With two years of tax returns you may be able to qualify for conventional, these will have the best rates and are worth looking at first. As Nate mentioned, hard money and DSCR lenders will not look at your personal income and there are other loans that do look at personal income but don't need tax returns - they may look at bank statements or even an accountant letter. They have higher risk to the lender though and are going to be more expensive.

[Robin Simon]

Quote from @Jewel B.:

I am self employed and curious as to my lending options.

I file my taxes and claim all my income and make my deductions.

I will be using 2021 and 2022 tax returns.

I am 100% owner of an LLC S-Corp.

My self employed income starts in 2021 and my LLC was founded January 2022.

I have a business credit card and bank account.

My income when working is consistent and predictable. However, the hours I work are inconsistent (by choice) as I do freelance and contract work (no 1099) and like to travel etc. My 2021 and 2022 incomes however are consistent with one another.

My 2021 income also includes a fairly small amount of W2 income, as well as some stimulus check and unemployment BACKPAY income. (I returned to work August 2020)

I will be working regularly from later September 2022 through the foreseeable future, so I will have bank statements to provide.

I will be filing my 2022 tax returns in February so I would be looking at more conventional lending in March.

I make quarterly estimated tax payments.

Credit score high 700s. No debt.

I am looking for either SFHs (STRs, MTRs, Section 8, student housing) or small MFHs (student housing, MTRs, LTRs).

Locally, I'm in Allentown, PA. OOS I would be looking primarily at NC, possibly WV, at this point (Midwest and South).

I'm foremost interested in STRs, MTRs, and student housing.

What types of loans am I looking at for my situation?

You are likely going to want to look for a non-QM probably particularly a "DSCR" non-QM loan. Non-QM is really designed for people in your situations that don't have W2 and are self-employed, DSCR is a subset of non-QM for investment properties specifically, and are typically the best for for STRs and MTRs

[Lyndsay Zwirlein]

Bank statement loans work for self employed individuals too. Can be better LTV than DSCR.

[Brian M Sweeney]

You have lots of options when it comes to lending nowadays. Nothing fits into a box anymore with all the programs available for different types of income and properties. Talk to a mortgage broker & learn more about what available to your situation. If have some contacts in the York/Philly area if you need one. 

[Albert Bui]

Quote from @Jewel B.:

I am self employed and curious as to my lending options.

I file my taxes and claim all my income and make my deductions.

I will be using 2021 and 2022 tax returns.

I am 100% owner of an LLC S-Corp.

My self employed income starts in 2021 and my LLC was founded January 2022.

I have a business credit card and bank account.

My income when working is consistent and predictable. However, the hours I work are inconsistent (by choice) as I do freelance and contract work (no 1099) and like to travel etc. My 2021 and 2022 incomes however are consistent with one another.

My 2021 income also includes a fairly small amount of W2 income, as well as some stimulus check and unemployment BACKPAY income. (I returned to work August 2020)

I will be working regularly from later September 2022 through the foreseeable future, so I will have bank statements to provide.

I will be filing my 2022 tax returns in February so I would be looking at more conventional lending in March.

I make quarterly estimated tax payments.

Credit score high 700s. No debt.

I am looking for either SFHs (STRs, MTRs, Section 8, student housing) or small MFHs (student housing, MTRs, LTRs).

Locally, I'm in Allentown, PA. OOS I would be looking primarily at NC, possibly WV, at this point (Midwest and South).

I'm foremost interested in STRs, MTRs, and student housing.

What types of loans am I looking at for my situation?

To put it succintly:

- conventional 1-4 unit owner occupied, second homes, or investment property occupancies -  you'll need 2 years in the business or licenses to show this timeline wise and MINIMUM one 1 tax return so its possible to qualify with conventional as early as Q1 or Q2 2023 if that is your 2 year mark only if your 2022 tax return is net positive enough to qualify for what you need. No one will know for sure till your 2022 drafts/taxreturn is reviewed, planned for, and filed in early Q1 2023. So this is left to be determined or TBD.

- FHA 1-4 unit owner occupied, needs 2 years tax returns and 2 years in the business so you'll probably need till 2 years of returns are available or above with conventional loan programs

- DSCR loans wont care about your SE or self employed income since its qualifying purely based off market rents, your reserves in cash/stock/savings, and fico scores

- HML or hard money lenders - are ABL or asset based lenders so they dont care about your credit or income just liquidity/reserves/cash/savings/stock + the property in question

- fix/flip lenders (HML above with more items) usually care only about min fico scores, the ARV value, the as-is value generally these need a BPO (broker price opinion) or appraisal in order to finance. They're typically lower rates than tranditional HML above and similar rates to DSCR loans but still higher than FHA/conventional

- commercial portfolio money at local banks - you can have limited tax or no tax returns for recently acquired buildings but they'll only lend till the property no longer cashflows, properties must be stabilized or all leased up with all unit leases signed/inked. This will probably be as easy or easier to get than hard money loans or HML. The upside are lower rates in the single digits at this time, the downside is its only for stabilized properties and only for properties that have enough cashflow to substantiate your loan monthly payment/debtservice. So properties that are vacant obviously wont qualify.

[Jewel B.]

Thank you for all the info everyone. I will look more into non QM loans, DSCR loans, and HML. I will also contact my credit union for more information on what they need from me.

[Eliott Elias]

DSCR lending

[Albert Bui]

Quote from @Jewel B.:

Thank you for all the info everyone. I will look more into non QM loans, DSCR loans, and HML. I will also contact my credit union for more information on what they need from me.

 You never know you should look at your year to date profit and loss to see if by filing 2022 early next year (march 2023) if you'll have enough to qualify. You may be able to do conventional just not this very second but its not that far in the distance as we have roughly 3-4 months till you can file. 

@Carlos Valencia@Matthew Kwan

[Jewel B.]

Quote from @Albert Bui:

Quote from @Jewel B.:

Thank you for all the info everyone. I will look more into non QM loans, DSCR loans, and HML. I will also contact my credit union for more information on what they need from me.

 You never know you should look at your year to date profit and loss to see if by filing 2022 early next year (march 2023) if you'll have enough to qualify. You may be able to do conventional just not this very second but its not that far in the distance as we have roughly 3-4 months till you can file. 

@Carlos Valencia@Matthew Kwan

 I will be at a profit.

[Albert Bui]

Quote from @Jewel B.:

Quote from @Albert Bui:

Quote from @Jewel B.:

Thank you for all the info everyone. I will look more into non QM loans, DSCR loans, and HML. I will also contact my credit union for more information on what they need from me.

 You never know you should look at your year to date profit and loss to see if by filing 2022 early next year (march 2023) if you'll have enough to qualify. You may be able to do conventional just not this very second but its not that far in the distance as we have roughly 3-4 months till you can file. 

@Carlos Valencia@Matthew Kwan

 I will be at a profit.

 See, there you go. 

At first you should figure out what your time frame is and when you need or would like to enter a financing transaction and figure out what each loan product or option requires.

Once you have all the options lined up and the requirements for each you can easily execute with confidence. The problem is when you only have a hammer everything seems to look like a “nail.” Everyone likes to rush to their product.

[Jewel B.]

Quote from @Albert Bui:

Quote from @Jewel B.:

Quote from @Albert Bui:

Quote from @Jewel B.:

Thank you for all the info everyone. I will look more into non QM loans, DSCR loans, and HML. I will also contact my credit union for more information on what they need from me.

 You never know you should look at your year to date profit and loss to see if by filing 2022 early next year (march 2023) if you'll have enough to qualify. You may be able to do conventional just not this very second but its not that far in the distance as we have roughly 3-4 months till you can file. 

@Carlos Valencia@Matthew Kwan

 I will be at a profit.

 See, there you go. 

At first you should figure out what your time frame is and when you need or would like to enter a financing transaction and figure out what each loan product or option requires.

Once you have all the options lined up and the requirements for each you can easily execute with confidence. The problem is when you only have a hammer everything seems to look like a “nail.” Everyone likes to rush to their product.

 Thanks!

[Dave McIntyre]

Hi Jewel,

In case it can help w/ your plans, you might consider unsecured funding. Funds can be used for down payment or gap funding, as well as 100% funding of a purchase. These can report to your business credit and therefore not show on your personal credit.

Be happy to connect.

Best,

Dave

[Stacy Raskin]

Hi Jewel, it depends on how much you write off a lot on your taxes. Conventional, DSCR and bank statement loans are options that come to mind. It really will come down to if you will occupy the rental and also how much you write off on your taxes besides your credit score. Let me know if you would like to discuss further.