Real Estate Investor · Longview, TX · Member since 2015 · 122 posts · 62 votes
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@Brandon Duff Thank you for offering such a great look into the world of someone who is self employed. Tough situation but great topic. I am looking forward to what BPrs have to say.
@Sante R. Doesn't that look bad? Any suggestions how that works ?
Brandyn this is what you call "creative financing".... :) SOME (not all) may frown on this method. However, my DTI was out the roof so I knew a mortgage was OUT of the question although my scores were 700. I opened a few lines of Credit, a few CC's and purchased. I later leveraged the properties. With this method, you really have to be disciplined and very careful. Good Luck
Real Estate Broker · Hollywood, FL · Member since 2014 · 34 posts · 6 votes
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I am not a lender but same as you for being selfemployed lenders will give me a hard time due to the amount of deductions so what I met with a mortgage broker before filling my taxes to get a better idea of how much in deductions should I present. Another option (again I am not a lender or mortgage) you can even do an ammedment to your previous taxes in order to show a higher income...
Investor · Rock Hill, SC · Member since 2014 · 122 posts · 33 votes
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@Brandon Duff I have the same issue. I own a web design firm and try to keep my W2's low. In 2012, I sold a mobile app for a nice sum. So, last year I went to get pre-approved for my 1st investment property.
Unfortunately our DTI was too large. We had recently refi'ed our primary home to a 10 year mortgage and my wife is a school teacher.
I ended up finding a partner who could get the mortgages and I backed the LLC partnership 75/25. That was a good option for me. My partner is hands on and we do a lot of the rehab ourselves.
This year, I was able to secure a line of credit that is backed by my investment portfolio. So I can make cash offers and pay the LOC at a prime minus 0.25%, with no mortgage fees.
Other options are to pitch owner financing. I just sold a small office condo and financed the whole deal. The buyer was happy she didn't have to pay all the mortgage fees and I've got a decent passive income. Some owners are open to that.
Lender · Newport Beach, CA · Member since 2013 · 264 posts · 97 votes
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Looks like from your basic numbers, you should still qualify for about a $900/mo PITI investment property. However, you're not including your current housing costs which is what I assume is killing your dti.
You'd have an option for hard money that takes into consideration the after repair value (ARV) you'd use if you found a fixer upper. This can usually get you more than 65% of the purchase price. So hard money groups will let you put 10 to 20% down of the purchase price up to 65% of the arv. That's the only way to put less money down with hard money.
Your other option are portfolios for investment properties that only consider the potential income and expenses of the property you're buying for rental. Usually you're going to max out at 65% of the purchase price, but you'll qualify on the merits of the property itself.
Rental Property Investor · Visalia, CA · Member since 2014 · 65 posts · 4 votes
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@Brandon Duff Check out Brandon's new book on creative financing. It's only like $9.99 for the kindle. It's an excellent read with a lot of real life scenarios. It also references other places for me information. It's definitely worth reading for a new investor.
Banks will lend based on building cash flow not yourself
Now is the time to always buy, as long as the numbers work
Is this hard to attain if you don't have any rental or investment experience? Also, if you decided to get a 5+ multi family could you keep one unit open for yourself or does that change the loan process in any way?
Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
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@Brandon Duff , the no rental experience can be countered by hiring a management company for a year or so and take the property over after that. The lender will be happy with the property being managed by a professional.
As we are only in February, if you did not file your 2014 taxes, you could file them not taking all those deductions. The lender will still add the last previous years together and dived by two and take the middle income.
My advice to you si that you should find a top lender in your area, one that is been in business at least 12 years, meaning that he was in the business when the "creative" way of lending was done and can run numbers on his calculator, not input numbers in a computer software program and see what the automatic underwriting tells him.