Creative Real Estate Financing

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Financing Obstacles - First Time Home Buyer

Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Posted May 31 2022, 09:09

Hi everyone, first time posting here and could use some advice. 

I spoke to a lender for the first time and they told me that I don't have enough income to qualify for a loan on a multi-family property in our area. What financing strategies are there for people like me who have lower W-2 income to get approved for a loan? Do we HAVE to increase our W-2 income or are there other ways we can get pre-approved for loans? My lender suggested getting a co-signer, but that would only work for the 1st property, right? I plan to buy multiple properties down the line and I'm not sure how I can do that with just my low income.

Any ideas or advice would be appreciated!

Westchester County, New York

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Zachary Inman
  • Specialist
  • Indianapolis, IN
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Zachary Inman
  • Specialist
  • Indianapolis, IN
Replied May 31 2022, 09:15

You could always seek out a private or hard-money lender. They can be a lot more flexible - especially if you have a detailed plan of how you're going to create value with your multifamily property. 

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Erik Estrada#4 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
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Erik Estrada#4 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
Replied May 31 2022, 16:58

Do you get income from other sources other than your W-2 job? How much cash do you have available other than what you set aside for your downpayment + closing costs? 

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John Alosio
  • Rental Property Investor
  • Stroudsburg PA
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John Alosio
  • Rental Property Investor
  • Stroudsburg PA
Replied May 31 2022, 19:48

@Yuki Jones

I assume you're looking to house-hack... Is there a more affordable area within driving distance to your job? Say you have to commute an hour to work instead of a 5 minute walk. Are you willing to sacrifice to make it happen?

Focus on your first property instead of worrying about the 10th.
Just take action. The next move will become clear the further along you go.

Cheers

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Vicky Manthos
  • New to Real Estate
  • Los Angeles, CA
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Vicky Manthos
  • New to Real Estate
  • Los Angeles, CA
Replied May 31 2022, 21:37

@Yuki Jones

A DSCR loan may be a viable option if the intended use of the property is purely for investment purposes, rather than house-hacking. W-2 forms are not typically required by lenders.

Best of luck!

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 1 2022, 09:48
Quote from @Erik Estrada:

Do you get income from other sources other than your W-2 job? How much cash do you have available other than what you set aside for your downpayment + closing costs? 


 Hi Erik, thanks for your response! I only get income from my W-2. Most of our cash will be used for a down payment + closing costs, save some for emergencies.

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 1 2022, 09:51
Quote from @Zachary Inman:

You could always seek out a private or hard-money lender. They can be a lot more flexible - especially if you have a detailed plan of how you're going to create value with your multifamily property. 


 Hi Zachary, thanks for your response! Is it common for first-time home buyers to use private/hard money lenders? Since it's my first time I've been going the conventional route using an agent and mortgage broker. What kind of criteria would a hard money lender look at if not my W-2 income? If I find a property where the numbers work and I can show that it can cash flow, would that be enough?

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 1 2022, 09:55
Quote from @Vicky Manthos:

@Yuki Jones

A DSCR loan may be a viable option if the intended use of the property is purely for investment purposes, rather than house-hacking. W-2 forms are not typically required by lenders.

Best of luck!


 Thanks Vicki! I haven't heard of that kind of loan before. I will do some research!

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 1 2022, 09:58
Quote from @John Alosio:

@Yuki Jones

I assume you're looking to house-hack... Is there a more affordable area within driving distance to your job? Say you have to commute an hour to work instead of a 5 minute walk. Are you willing to sacrifice to make it happen?

Focus on your first property instead of worrying about the 10th.
Just take action. The next move will become clear the further along you go.

Cheers


 Hi John, thanks for your response! Yes, location is something I definitely have to consider. Although prices are really high in my area, appreciation and rent rates are high too. I'd like to stay in my current area because of friends and family, but I'll consider this. Also thanks for your point about worrying about the 10th, I agree with that. Just gotta get my foot in the door with this first property and take it from there.

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Frank Greg
  • Lender
  • rate.bid
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Frank Greg
  • Lender
  • rate.bid
Replied Jun 1 2022, 12:48
Quote from @Yuki Jones:

Hi everyone, first time posting here and could use some advice. 

I spoke to a lender for the first time and they told me that I don't have enough income to qualify for a loan on a multi-family property in our area. What financing strategies are there for people like me who have lower W-2 income to get approved for a loan? Do we HAVE to increase our W-2 income or are there other ways we can get pre-approved for loans? My lender suggested getting a co-signer, but that would only work for the 1st property, right? I plan to buy multiple properties down the line and I'm not sure how I can do that with just my low income.

Any ideas or advice would be appreciated!

@Yuki Jones

What is the exact property you trying to buy (including condition, configuration) and where?

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 2 2022, 08:36
Quote from @Frank Greg:
Quote from @Yuki Jones:

Hi everyone, first time posting here and could use some advice. 

I spoke to a lender for the first time and they told me that I don't have enough income to qualify for a loan on a multi-family property in our area. What financing strategies are there for people like me who have lower W-2 income to get approved for a loan? Do we HAVE to increase our W-2 income or are there other ways we can get pre-approved for loans? My lender suggested getting a co-signer, but that would only work for the 1st property, right? I plan to buy multiple properties down the line and I'm not sure how I can do that with just my low income.

Any ideas or advice would be appreciated!

@Yuki Jones

What is the exact property you trying to buy (including condition, configuration) and where?


 Hi Frank, thanks for your question! I have not been able to look at properties in the area yet. The agent that I spoke to and would like to work with said that I need to get a pre-approval first and that's where I'm at. All I know is that we're looking for a multifamily (2-4 units) in Westchester County, NY.

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Conner Olsen
  • Real Estate Agent
  • Austin, TX
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Conner Olsen
  • Real Estate Agent
  • Austin, TX
Replied Jun 2 2022, 08:42

@Yuki Jones I would look into a different way to house hack if you can't afford the multifamily property, maybe a condo or townhome where the prices are lower.

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Michael Paling
  • New to Real Estate
  • Negaunee, MI
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Michael Paling
  • New to Real Estate
  • Negaunee, MI
Replied Jun 2 2022, 09:21

How many lenders have you talked with? If you’ve only chatted with one, talk with a few more. Chat with a couple small local banks too, because they’ll probably be more flexible than big national banks. 

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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
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Yuki Jones
  • New to Real Estate
  • Westchester County, NY
Replied Jun 2 2022, 12:21
Quote from @Michael Paling:

How many lenders have you talked with? If you’ve only chatted with one, talk with a few more. Chat with a couple small local banks too, because they’ll probably be more flexible than big national banks. 


 Hi Michael, thanks for your response! Yeah I think that may be a good idea, just so I know for sure that I need a co-signer. Maybe there's another lender who is okay with just my income.