How can I get a loan after being laid off despite having $230,000

Question

Hello everyone. I was recently laid off due to COVID-19 job cuts. Just a mere month ago, I was ready to approach some banks to discuss financing a deal. I have $230,000 ready to go but I’m afraid lenders will not approve any loans due to the fact that I was just laid off. Are there any other ways to get lending?

Brian Garrett · Answer

First of all don't announce having $230k on a public forum. You open yourself up to a lot of people that will be looking to spend your money, not invest it. Ignore all of the colleague requests and messages you get with "opportunities" and "deals". Next you need to look into commercial/portfolio loans. They will look more at the financials of the deal itself rather than your personal financials. Best of luck!

Nick Heil · Answer

Don't be afraid, just put together your plan and go talk to them anyhow. If they say no, move on to the next one. If you have a good asset position, which sounds like you do, and you can show that you still have income and are working towards something then they will still work with you. In 2018 I quit my job and was just doing my storage/real estate business full time for 6 moths (I had good assets but also a lot of good debt at this time) and during that time I bought my wife and I's personal residence we live in now and the bank didn't even bat an eye. Just depends the lender and the type of relationship you have. You're right in that it could certainly be more difficult, but again persistence and relationships are key here. You can definitely get it done.

Lola Omishore · Answer

Just to add some insight to the commercial lending recommendations...

I’ve spoken with quite a few banks now regarding commercial property loans and they aren’t as lenient on their requirements for financing as some would have you think.

Over 10 banks that I spoke with all had DTI limit restrictions (43-47%), higher property purchase price requirements (usually over $250,000), higher closing costs and will still require a guarantor in an LLC that would typically meet conventional lending requirements (FICO score minimum, 2 year tax returns, paystubs, etc)

Have you considered being a private investor for short term investment property loans? If you have friends that are investors or trusted colleagues, you could speak with an attorney on how to execute being a private lender.

Ian Walsh · Answer

Local lenders instead of national.

Michael Belmore · Answer

@Jeremy Holleb

Hey Jeremy,

I second Brian on this one. Start networking with a commercial lender. Most are really busy now so I would have something in hand before talking to them.

Good luck !

- Mike

Jeremy Holleb · Answer

@Joshua Ferrari thank you so much for all of this information. I’m going to start working on some of the options you recommended

Tom Kaser · Answer

@Brian Garrett

Roni E. · Answer

@Jeremy Holleb @Brian Garrett

@Brian Garrett Gave sound advise first. Next, I would reach out to the bank and find out. I would also speak to the local credit union and see if they can help. Next, I would look at a discount from the seller. Could you by chance house hack this deal, e.g. buy a 4 plex rent 3 out and live in the 4th?

Joshua Ferrari · Answer

Agreed with @Brian Garrett. Keep that kind of information to only close, trusted friends & family.

There are tons of different ways to get lending. Hard money loans don't typically look at you so much as they look at the deals ability to produce sufficient income for the debt service. However, hard money comes with points (fees charged by the lender) and typically a higher interest rate.

If you happen to know anyone else with a big chunk of money you could consider private money. Then you two can hash out all the terms amongst yourselves and leave the big banks out of it.

Owner financing is also a creative option to getting deals done. Your ability to solve the sellers problem could score you amazing terms that make the deal extremely lucrative for both you & the seller.

Commercial loans as well would be a prime opportunity due to the fact that they too, don't look closely at your personal financial situation.

You could also try partnering with someone that does have proof of income and split the equity or pay them a fee for their contribution to obtaining financing.

I'm sure I'm missing 1,000 other options. There's tons of forum posts on lending that I'm sure would help you have a better understanding of it all. You could also check out our website on my personal page that has tons of blog posts and podcast episodes on syndication and how that's another possibility for funding the deal.

Nick Rutkowski · Answer

@Jeremy Holleb

Buy a house all cash, there are plenty of houses priced under 230k. Better yet, go with what that first guy said about commercial.

How can I get a loan after being laid off despite having $230,000

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