Im having financing issues and a great off market deal
Hello everybody, thank you for any consideration ahead of time.
so I am in a relatively peculiar situation and would love to get some advise. I'm going to be very honest because the facts and truths matter in this situation.
I own a single family home and was living there for 4 years with my girlfriend. My neighbors approached me a few months ago offering us there home for a great discount if we would be willing to deal with all the belongings as they just purchased a condo in Arizona and took off. They gave us up to a year to buy the property off market and also let us lease the property while we were renovating and tenant seeking.
my girlfriend and I came up with a plan and started executing. The plan was I will spend all the money I have to renovate the currently owned home and list it on the market. Her responsibility was to save up the down payment and she would buy the house for her self that way we each end up with one single family home
Great plan right?
after I get everything totally renovated, we move in next door, we set a closing date on the new home. She decides to cheat on me and leave me for a more "fun" life.
im stuck with my place being leased and also an approaching closing date. And no financing.
some more facts being that I started a masonry business 1-1/2 years ago and do not have my full 2 years tax returns. We have year over year projections proving growth in the business and we also just leased my property and it will be cash flow positive $650.
my loan officer I am working with is not amused with all the quirks involved in this deal and has let me know that she does not think she can find a way to get financing for me even with 20% down.
if anyone has any insight on this situation or any ideas how to achieve unconventional financing I would be in your debts forever.
thank you to anyone who reads this fully and comments.
Dom
Your story is a bit hard to follow.
But what I'm gathering is that you have a renovated home with equity that you used to live in which is now leased, and you are under contract to buy the neighboring house. I think your objective is to own both homes, living in 1 and renting out the other.
Well you already achieved your goal of renovating and renting out your old home. So you can check that one off the list.
Regarding the financing situation on your new neighboring home, just call up your neighbor and let them know that due to personal reasons and starting a new business, you will need more time before you can get financing in order to buy their house. It sounds like they have already been very patient and accommodating with you. They may give you a longer escrow, or maybe they would entertaining seller financing until you have your full 2 year tax returns.
Thank you very much for the reply. I apologize for any confusion. This is my first post and really my first question regarding investments
I'm eager to close because of rising interest rates. But I understand if that's what I have to do.
Ive been reading a little about "bank statement loans" where a self employed individual can use the cash flow of the business to qualify for the loan instead of typical measures such as W2 and returns. I haven't had the chance to talk to my loan officer about those.
thank you
@Dominic Lupe Is the juice worth the squeeze?
Only asking because sometimes things happen for a reason. Maybe this deal isn't as good as you think or maybe your attention should be focused on the business you started. I'm sure that's taking most of your time. Hopefully the sellers continue to be patience and keep the deal off market.
Sounds like they like you :-) Obviously you did something right to get this far. Keep it up man.
Quote from @Jaron Walling:
@Dominic Lupe Is the juice worth the squeeze?
Only asking because sometimes things happen for a reason. Maybe this deal isn't as good as you think or maybe your attention should be focused on the business you started. I'm sure that's taking most of your time. Hopefully the sellers continue to be patience and keep the deal off market.
Sounds like they like you :-) Obviously you did something right to get this far. Keep it up man.
Thank you Jaron,
I feel the juice is worth the squeeze. Let present the numbers:
Home appraisal $160,000
selling price $120,000
time frame to be purchase no later then 11/22
they are leasing it to me for $100 a month all included untill 11/22
this unit is also next door to my current rental.
it is a 3 bed 1 bath, 1400sqft, 2 garage garage, concrete drive way, concrete patio, white vinyl privacy fence, with relatively new windows, flooring, and everything was well taken care of through the years. AC/furnace is good shape, water heater in good shape. Only thing it honestly will need in 5 years other than scheduled maintenance is a roof.
Any thoughts?
thanks
Dom
@Dominic Lupe I am not sure I am fully following what the issue is, but have you looked into DSCR loans? They don't require the same W2 / income verification as "conventional" financing. You would need to certify that you are not going to live in the property, as DSCR loans are not for primary residences.
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Your home is newly renovated. Stay there.
Get the sellers to add you to title and then refinance them off any liens they may have on it in 6 months. It's May. They want to be done with the property by November. You have time. By then, you'll have 2 years self employed and be able to qualify for conventional financing or do a DSCR loan; but either way, you'll be in title and qualify.
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@Dominic Lupe I would suggest going with a 12-month bank statement loan, they typically require to you put at least 10% down for the purchase and go based on your bank statements rather than your tax returns. This gets rid of that obstacle about having to have 2 years' worth of employment history. You'll typically have to be content with a higher rate because of the risk to the lender but that's okay because you can then refinance out of the bank statement loan into a conventional when your 2-year history is there. But, many lenders offer 90% LTV Bank statement loan with no Mortgage Insurance. So in reality it balances out.
another option is to go with DSCR which is a no income, no employment loan. You can put down as little as 15% depending on your credit score and the lender. This is made for investors, so you'll be purchasing an investment property essentially which you can then refi out of as well. There are tons of options, make sure you are partnered with the right broker.
Let me know if you have any questions or if i could help with anything.
@Dominic Lupe
There are loans for any situation, but the less traditional it is the higher the rate will be. But a "high" rate today might end up as a "low" rate tomorrow...
As others have mentioned, DSCR, bank statement, conventional, and more options to consider.
I have a software that can show multiple scenarios side by side so you can see the payments and other details for comparison if you are needing more information to help you make a decision.
Here's an idea, why not partner with someone on that deal? Get the 32k down payment from them and either pay interest on it (you mention 650$ in cash flow, should be sufficient to pay them a fair rate) or give them equity.
Otherwise, have the sellers provide seller financing for the down payment portion, offer them a slightly higher price with that option.
Another idea would be to sell the belongings (you mention they left them there and gave you that price because they didn't want to deal with them). That would allow you to raise some cash towards the down payment.
You have a lot of options in front of you, after all, you're getting the property at 75% of fair market value, this should be an easy deal to get a partner on board.
Good luck!
I agree with @Stephanie P.! Convince them to add you on title then get financing set up in few months time. Probably best to share the plan and have a higher level of communication with the seller to make this happen. Interest rates are higher so factor that into your numbers.
Looks like you're buying it right and I'll assume this property cash-flows otherwise I'd kick the can down the road. Would be great to own both neighboring properties. Keep working the deal.
Quote from @Dominic Lupe:
Hello everybody, thank you for any consideration ahead of time.
so I am in a relatively peculiar situation and would love to get some advise. I'm going to be very honest because the facts and truths matter in this situation.
I own a single family home and was living there for 4 years with my girlfriend. My neighbors approached me a few months ago offering us there home for a great discount if we would be willing to deal with all the belongings as they just purchased a condo in Arizona and took off. They gave us up to a year to buy the property off market and also let us lease the property while we were renovating and tenant seeking.
my girlfriend and I came up with a plan and started executing. The plan was I will spend all the money I have to renovate the currently owned home and list it on the market. Her responsibility was to save up the down payment and she would buy the house for her self that way we each end up with one single family home
Great plan right?
after I get everything totally renovated, we move in next door, we set a closing date on the new home. She decides to cheat on me and leave me for a more "fun" life.
im stuck with my place being leased and also an approaching closing date. And no financing.
some more facts being that I started a masonry business 1-1/2 years ago and do not have my full 2 years tax returns. We have year over year projections proving growth in the business and we also just leased my property and it will be cash flow positive $650.
my loan officer I am working with is not amused with all the quirks involved in this deal and has let me know that she does not think she can find a way to get financing for me even with 20% down.
if anyone has any insight on this situation or any ideas how to achieve unconventional financing I would be in your debts forever.
thank you to anyone who reads this fully and comments.
Dom
@Dominic Lupe As you have probably figured out, you typically want to have formal agreements (signed contracts) by and between all parties to an arrangement especially when dabbling into business transactions such as 'co-buying' property and or using your life savings to renovate property belonging to another.
There is always some risk with mingling personal relationships and business but generally a separation or break-up with a partner on a personal level does not relieve you of your legal obligation to perform on your agreement with your seller. Whether or not your splitting partner has some liability for leaving you with the bags, is a matter of law based on which state you live in.
Would require specifics about the properties involved to determine what is or isn't feasible.
@Zac Stiles zac I would love to see these options side by side. Thank you for being willing to share that information.
Dom
@Dominic Lupe
Send me a direct message and I will put it together and coordinate sending back the link to view
Hey Dominique,
If it's not to late I'd love to help you with your situation. I've just sent you a PM