Loan needed, high credit score, low taxable income, have equity

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Loan needed, high credit score, low taxable income, have equity

Carolyn Clark
Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote

How do I acquire the liquidity I need to maneuver? I’m a lifelong serial entrepreneur, not new to business development, but just now turning to real estate.

I have an excellent credit score, very low debit, equity in a condominium and a small trust account, but have mostly untaxed income so conventional lenders just laugh at me. I briefly looked at asset based lender like Visio (?) lending, but they seemed a little shady. Any other recommendations on acquiring liquidity or loans to move forward.

I own the condominium I live in, in Honolulu County with $100,000 plus in equity. The 900 sq ft condo is still increasing in value at about $1,000 or more Per month, plus I’m a commercial designer and have done some nice remodeling. The condo has a 33 year loan from the USDA at 3.25%, but still wish to sell not rent out the unit-and I believe I need the cash anyway. Definitely Taking advice on this point for sure (and thanks.)

What I really want to do is to cash out on the condo ASAP and buy small rental properties and land in secondary and scenic markets like the Oregon coast or Puna, Hawaii. As an aside, I’ve lived in Hawaii for 28 years on 4 different islands and could help anyone not familiar with he markets here, who want to enter especially Puna and Oahu.

Also need a good lawyer specializing in setting up LLCs. Thanks for help or advice.

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Mark Safrin
Lender · Lakewood, NJ · Member since 2019 · 247 posts · 101 votes
6y
Originally posted by @Carolyn Clark:

How do I acquire the liquidity I need to maneuver? I’m a lifelong serial entrepreneur, not new to business development, but just now turning to real estate.

I have an excellent credit score, very low debit, equity in a condominium and a small trust account, but have mostly untaxed income so conventional lenders just laugh at me. I briefly looked at asset based lender like Visio (?) lending, but they seemed a little shady. Any other recommendations on acquiring liquidity or loans to move forward.

I own the condominium I live in, in Honolulu County with $100,000 plus in equity. The 900 sq ft condo is still increasing in value at about $1,000 or more Per month, plus I’m a commercial designer and have done some nice remodeling. The condo has a 33 year loan from the USDA at 3.25%, but still wish to sell not rent out the unit-and I believe I need the cash anyway. Definitely Taking advice on this point for sure (and thanks.)

What I really want to do is to cash out on the condo ASAP and buy small rental properties and land in secondary and scenic markets like the Oregon coast or Puna, Hawaii. As an aside, I’ve lived in Hawaii for 28 years on 4 different islands and could help anyone not familiar with he markets here, who want to enter especially Puna and Oahu.

Also need a good lawyer specializing in setting up LLCs. Thanks for help or advice.

Visio are an established HML, we used to use them back in our broker days before we aquired funds and became HMLs ourselves. They are legit.

Of course like any HMLs,  _You_ and your property need to fit into their loan criteria. A mere $100k (not sure how much "+" we are talking about) property might not be sufficient to meet a HMLs minimum loan size. This is because they may subtract from the maximum they can lend to you a) because you could well be considered an investment property newbie and b) if this is indeed a cashout.

We for instance would subtract 10% from our loan caps for the first and at least 5% for the second and the likely remaining 65% of LTV might not be sufficient to meet our $75k minimum loan size.

You should also make sure whatever HML you use is comfortable both lending on the type of condominium this is and in the State of Hawaii.

Aside from HMLs, there are also true private lenders (though the trust issue that you seem to have still applies to them), also some lending institutions that fall somewhere between conventional and HMLs. If you can find these.

But for most people with assets, good credit but low taxable income, HMLs tend to be the way to go. You can always ask here on BP for users experiences with any particular HML you are contemplating using who are willing to lend to you.

Best wishes.

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  • Carolyn Clark
    OP
    Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote
    6y

    I don’t think you read my entire post. I do not and never have owed money to the IRS how dare you insinuate I might.

    You are trolling and Abusive - you should remove your comment

    0Reply
  • Mark Safrin
    Lender · Lakewood, NJ · Member since 2019 · 247 posts · 101 votes
    6y
    Originally posted by @Carolyn Clark:

    How do I acquire the liquidity I need to maneuver? I’m a lifelong serial entrepreneur, not new to business development, but just now turning to real estate.

    I have an excellent credit score, very low debit, equity in a condominium and a small trust account, but have mostly untaxed income so conventional lenders just laugh at me. I briefly looked at asset based lender like Visio (?) lending, but they seemed a little shady. Any other recommendations on acquiring liquidity or loans to move forward.

    I own the condominium I live in, in Honolulu County with $100,000 plus in equity. The 900 sq ft condo is still increasing in value at about $1,000 or more Per month, plus I’m a commercial designer and have done some nice remodeling. The condo has a 33 year loan from the USDA at 3.25%, but still wish to sell not rent out the unit-and I believe I need the cash anyway. Definitely Taking advice on this point for sure (and thanks.)

    What I really want to do is to cash out on the condo ASAP and buy small rental properties and land in secondary and scenic markets like the Oregon coast or Puna, Hawaii. As an aside, I’ve lived in Hawaii for 28 years on 4 different islands and could help anyone not familiar with he markets here, who want to enter especially Puna and Oahu.

    Also need a good lawyer specializing in setting up LLCs. Thanks for help or advice.

    Visio are an established HML, we used to use them back in our broker days before we aquired funds and became HMLs ourselves. They are legit.

    Of course like any HMLs,  _You_ and your property need to fit into their loan criteria. A mere $100k (not sure how much "+" we are talking about) property might not be sufficient to meet a HMLs minimum loan size. This is because they may subtract from the maximum they can lend to you a) because you could well be considered an investment property newbie and b) if this is indeed a cashout.

    We for instance would subtract 10% from our loan caps for the first and at least 5% for the second and the likely remaining 65% of LTV might not be sufficient to meet our $75k minimum loan size.

    You should also make sure whatever HML you use is comfortable both lending on the type of condominium this is and in the State of Hawaii.

    Aside from HMLs, there are also true private lenders (though the trust issue that you seem to have still applies to them), also some lending institutions that fall somewhere between conventional and HMLs. If you can find these.

    But for most people with assets, good credit but low taxable income, HMLs tend to be the way to go. You can always ask here on BP for users experiences with any particular HML you are contemplating using who are willing to lend to you.

    Best wishes.

    6Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    6y

    If you haven't done so yet, check on BP forum for a HML and see if there's anyone lending in your vicinity. There is also another website that I have used which has a matrix showing regions, types of properties, loans, loan rates, etc. It's called Scotsmanguide. You can also do searches for HML online.

    1Reply
  • Carolyn Clark
    OP
    Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote
    6y

    @Karen Margrave

    Thank you, very helpful information I appreciate your input.

    0Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    6y

    @Carolyn Clark you will face some challenges here on 2 fronts - that your property is a condo and that it's worth $100,000.  It sounds a little strange but lower loan amounts can be challenging and so can condos themselves.  You will 100% need a smaller lender to help with this type of a loan.

    Here's what I would suggest on that front:

    1. Post in the Bigger Pockets STATE forum that you are looking in. There are usually some good, local investors that monitor those forums. Maybe they already have a suggestion or recommendation for you? Certainly try there.
    2. Visit your local REI groups. There are many groups that meet across the country. Some post here on Bigger Pockets. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you. There might be even some on facebook for your area as well.

    Anyway, I hope this helps in some way. Thanks!

    2Reply
  • Carolyn Clark
    OP
    Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote
    6y

    @Benjamin Hurwitz

    Thank you for responding and for the good advice. I’m a newbie at real estate investment but not to business development in general. The reassurance about non conventional Lenders is very helpful.

    0Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    6y

    As others have said low value can be difficult for lenders, but I wouldn't typically consider a $100k loan low balance, more like $50k as a minimum. But, that's why it's good to get different perspective from different people who've been in the lending sphere, different states, different lenders, different lending programs. Are you looking to buy the properties on long-term mortgages outright or short-term for rehab and refi? Also, land is a tough place to start as a lot of lenders don't like lending on it unless it's a really strong borrower and a really strong opportunity.

    1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    I had a similar problem. Took two years of showing high profits to qualify. There are also various no income check mortgages/refi but rates are high. 

    Another option is dump cash in high cashflow cheap rental and actually show the profits on tax returns. If you are always writing off a ton of stuff it's going to be hard. 

    1Reply
  • Lakia H.
    New to Real Estate · Los Angeles CA · Member since 2019 · 6 posts · 0 votes
    6y

    I have a great person for you who does llc's a few people actually

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    @Carolyn Clark Another thing is going to some meetups and start talking to some HMLs there and building relationships can also be a great way to get these lenders to take a chance with you. 

    Real Estate, as we all know, is a relationship business. 

    1Reply
  • Carolyn Clark
    OP
    Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote
    6y

    In the state of Hawaii - we have 1.5 million people on 5 islands sooo those Meetup groups come and go, but I'll look again. I wandered into one of those buy our program for $5,000.00 and we will show you how to flip houses awhile back and did get a little spooked. After buying a condo and fixing it up and seeing huge gains I changed my tune and will look into investing again.

    Thank you and Aloha...

    0Reply
  • Carolyn Clark
    OP
    Homeowner · Mililani, HI · Member since 2019 · 8 posts · 1 vote
    6y

    @Andrew Postell

    Thanks for comments, If I was looking for properties in Texas I'd be all over your skill pile (is this ok on this forum)? I need to set up an LLC and need accounting advice so I'll try to look in my State section on BP. The equity in my condo is over $130,000 so that's the hard cash I will have when sold. Honolulu country is a crazy market very expensive, probably heading to an outer Island to buy actual houses.

    Aloha, Carolyn

    0Reply
  • Duc Ong
    Real Estate Agent · Honolulu, HI · Member since 2015 · 450 posts · 196 votes
    6y

    @Carolyn Clark I can help connect you to some HML's on island, if you are looking to do another deal here. As for lawyers, I can help you with that also. I'll send a PM. I don't think you need one of those guru programs, since most of the information is free. The hard part is finding the deal and execution on the rehab.

    1Reply
  • Kiley N.
    Honolulu, HI · Member since 2017 · 231 posts · 191 votes
    6y

    @Carolyn Clark

    I organize a local meetup in downtown Honolulu:

    https://www.biggerpockets.com/forums/521/topics/779772-rei-professionals-lunch-downtown-honolulu

    As it happens, our next speaker is an attorney who will be discussing LLC formation.

    Hope you can make it!

    1Reply
  • Matt Rosen
    Lender · Honolulu, HI · Member since 2008 · 166 posts · 46 votes
    6y

    @Carolyn Clark Hi Carolyn, I would like to setup a call. I am local and have a strong private equity lender database and might be able to help in some areas.

    I will DM you and take it from there.

    Aloha

    Matt

    0Reply
  • Austin Ojimgba
    Lender · Member since 2018 · 59 posts · 14 votes
    6y

    @ Carolyn Clark, another option i think or believe might be favorable to you is to secure a Business Loan using your condominium as collateral it doesn't matter if you live on it or not or have any mortgage as the lender is willing to take up to 3rd position on the lien. Since you have enough equity on the property you will be qualified.This will be a short term loan up to 24 months and you must have a Business Account to receive funds.I can share complete information's with you assuming this is an option you will like to explore.

    0Reply
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