Self employed, several business... Low reported income.

11 Replies

I found an amazing deal (if anyone is paying attention, the cash deal ppl screwed up and I'm signing a buyer/seller agreement tomorrow!)

It's $172k as-is for a house that needs int/ext paint and 3/4 of the roofreshingled and it would be worth 225-250 easy! 2085 sqft 4 bed, 2 bath in a killer area.

Problem is that I've been self employed forever and though my businesses gross a fair amount (130k, 80k, 100k a year, as well as 47k a year in rental income and I'll rent out current place for 900/month ) but in the end I only take a draw of $3k/month and after CPA is done with taxes I'm at 20k/year n my returns.  And my fico took a stupid ding because the CPA filed my taxes that said I owed 6k and between that and filing the payment plan, they slapped a lien on me for like 2 months... From 750 to 690 :( with that being the only ding. 

I owe about 80k on my current mortgage (cost me 578/month), cars are owned outright, one rental property is used as collateral for a 25k line of credit, another comercial rental property is owned by an llc of mine that is owner financed for like 280k (2200/month),  15k on discover card, 4k on another card, 4k and another card.

Over half a million in assets counting all the properties and equipment in the businesses.

What are your guys thoughts? 

There are lenders that will work with the self employed based off of 12 months of bank statements for all entities.

@Kevin Richard

Not all lenders are the same.  I have found lenders with "in-house" funding to be the most flexible. You may also contact mortgage brokers who can choose from a variety of lenders.  After mortgages 1-3, it took me a while to find a lender to work with my self-employed situation.

I'm going to be very honest with you. There are some red flags in the situation you described. Tip #1: You need to have more cash in reserve for unexpected emergencies/repairs. Credit cards can serve for those emergency repairs though it is unwise to carry a balance if it can be avoided. Your credit card balance of 24K needs to be dealt with before acquiring more or at least put under the LLC. A credit card balance in an LLC has little effect on your credit score while credit card balances in your name will have a direct impact on your credit score.

A fast nickel beats a slow dime, so in this case, if you have a good deal with the 175K home you should try to extend the closing date (to give yourself some time) and flip the deal to another investor before the close of escrow. Otherwise you face acquisition costs, holding costs, as well as renovation costs, it adds up quickly.

Good luck!   

@Kevin Richardundefined

OPC - other peoples credit
If it is a great deal partner with someone to take it down . "Some of the money is better than none of the money" send me the CMA and average days on market for homes in that area in the projected sell price range as well as a detail repair estimate from your contractor. If the numbers and hold times work we may be able to put something together.

thanks for all the tips guys.

This kind of sprung up on me out of no where.

I'm looking to live in this one long term, not flip it or rent it anytime soon.  Though if I were to rent it it would rent for around $1,700/month.

Kevin

You could try to get owner financing because you are going to live in it.  Many owners are willing to take back a note to get a monthly income.  I was going to suggest private money but, because you are living in to that can cause headaches that the lender does not want.  Creative financing I think is the best option.

Originally posted by @Joanna Kotlarski :

You could try to get owner financing because you are going to live in it.  Many owners are willing to take back a note to get a monthly income.  I was going to suggest private money but, because you are living in to that can cause headaches that the lender does not want.  Creative financing I think is the best option.

Yeah, that isn't an option, the guy just wants to cash out.

My loan officer at one of my banks is 98% sure we should get approval at this point.  I had to pledge some other properties to secure it, even though this home should appraise for close 250k and the selling is 172k. *sigh*

Terms aren't great, 4.9% 10 year balloon amortized at 30 years.

Kevin,  Congrats!  It sounds like you have got things going your way for this property.

Thanks, that makes me feel a little better.

Kevin

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