Creative Real Estate Financing

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Nik Eliadis
  • Rental Property Investor
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Newbie Investor looking for advice!

Nik Eliadis
  • Rental Property Investor
Posted May 17 2022, 02:32

Hi there,  I'm new to BiggerPockets and am looking for advice on cash-out refinancing.

I'm a newbie, but have gone all in with real estate investing and have just closed on 2 properties I plan to rent long term. There is a real shortage of rentals in Colorado Springs.
I paid cash from overseas funds (I am a permanent resident) and am now wanting to cash-out refi to buy additional long term rental investments and BRRRR.

The challenge seems to be around how to declare overseas income and proof of income.  One lender has asked how I funded the purchases. 
I also have a mix of W2 and 1099 tax returns for the last 2 years only. 

Has anyone had any similar experience?
How does the rental income come into play? ...and does anyone have any advice on the types of lenders who can assist?

Once I get over this hurdle - I'm sure financing will be easier?!

Thanks in advance,
Nik

Colorado Springs, Colorado

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Stuart Grazier
  • Investor
  • Parker, CO
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Stuart Grazier
  • Investor
  • Parker, CO
Replied May 17 2022, 04:03

@Nik Eliadis Have you looked into trying a commercial DSCR loan? They base the loan off the income the properties are producing, not off of your own income. I'll send you a DM.

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Jordan Malara
  • Real Estate Agent
  • Colorado Springs, CO
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Jordan Malara
  • Real Estate Agent
  • Colorado Springs, CO
Replied Jun 7 2022, 11:04

@Nik Eliadis Does the lender you are currently working with have experience working with investors? It is always best to find a lending team that is investors themselves. I have someone that I would be happy to connect you with. As far as rental income is concerned, if it is not on your tax returns then it cannot be fully counted towards your DTI, however, most lenders can count up to 75% of rental income not on tax returns.

Real Estate Agent Colorado (#100097631)

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Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
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Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
Replied Jun 7 2022, 13:06

@Nik Eliadis there are several layers to your question here.  

Layer 1 - how long ago did you purchase your properties?

Layer 2 - when will you have the properties rented? (you stated you "plan" on having them rented....so I'm assuming they aren't rented yet)

Layer 3 - are you currently W2'd or were you only W2'd in the past?

Now, you are on the right track here - what lender would be able to help you? But just a "DSCR" loan type won't be able to look past these layers I mentioned. Some of those answers might mean that you need to wait 6-12 months to get your cash back out of the properties. So the strongest recommendation I would suggest to you is get in front of as many lenders as possible. But don't just ask them "can you help me"....but rather ask, what do you need from a borrower to lend to them? Lean on other real estate investors in your area (there are a couple of groups that meet in Colorado Springs) and see who they use. Likely this will be from a local lender. Feel free to reach a post I wrote on how to find good lenders that you can find HERE.  I think that will help some as well as it does contain some good questions to ask lenders.  

I hope all of this makes sense but feel free to post anything else if you need.  Thanks!

Lender Texas (#392627)

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Shane J. Renard
  • Real Estate Agent
  • DePere WI
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Shane J. Renard
  • Real Estate Agent
  • DePere WI
Replied Jun 7 2022, 13:10

@Nik Eliadis - That is a lot to answer. But use the lease copies and current P&L's to show the lender what the properties are making. As for the overseas money. That is already been proven when you purchased the first few properties. Maybe speak to another commercial lender who is more familiar with this BRRRR method.

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Replied Jun 7 2022, 13:40

@Nik Eliadis well once you get the cash-out and are looking to buy additional long term rental investments and BRRRR. I could assist you find your next property. New Western is getting tons of deals in Colorado springs that would make great rentals.