I want to know your opinions on getting funded
Real Estate Investor · Stillwater, OK · Member since 2008 · 11 posts · 0 votes
Here's the deal...
I want to buy real estate as out of state investments. I live in California and unless it's do Colorado I don't plan on moving :)
I've found a few small properties and even some medium sized properties that cashflow enough for me to consider a purchase.
Well we were Realtors for a while last year and didn't make much at all, we were busy trying to sell our own investment home to move on to this.
Well the home did sell, so on our loan paperwork we can put a substantial amount of money that we made last year.
The problem is of the regular 'job' we don't list. Our only income is the sale of that previous house, and thats also what we've lived off of.
How finance-able am I??
I mean, any ideas? Any lenders come to mind that would work with such situation. I would really like a non-recourse loan if i can.
I have a new truck and trailer ( about 800 in car payments between the two) and NO other bills other than regular living expenses. I and my wife have very good credit and a paid off home.
I know it sounds like this: :violin: LOL but i need some reassurance/help if you please. Thank you.
- Jason
Hi Jason,
There are a number of things you can do for financing, especially with your home owned free and clear! You will be able to leverage that to your advantage.
With today's funky lending requirements, you should be okay on the income side because lenders will look at two year's worth of tax returns. If you had a decent income two years ago and combine that with the obvious evidence that you can generate income from real estate (which you did), you'll be over the hump with the income question.
Using your own home as collateral, most lenders won't flinch if you're asking to borrow only 50% of your home's value. If your home is worth 200k and you want to borrow 50%, that's 100k that's just been freed up for you to use to invest!
Also, instead of going for a mortgage, I would recommend that you go for a home equity line of credit (heloc). You only pay interest on what you borrow and can pay it back and then reborrow it over and over again. The interest is a tax write-off. You can use the HELOC for your down payments - translated - if you're buying 100k properties and you have a 100k line of credit and need 10% down, you can buy ten properties :) with your line of credit.
If you already have properties ear marked for purchase and/or have them under contract, you may want to get the HELOC in the same month as you begin applying for mortgages for credit inquiry purposes. You will also likely have to shop different lenders as it's very hard to find one that will do all of your properties. Again, if you're looking to buy several, try hard to get them all closed within a short period of time. Once a mortgage hits your credit, lenders will shy away from loaning you any more money. They term it "rapid acquisition" which tells them you're a high risk borrower (like me! :wink: )
Your other alternative and likely a faster and better scenario is to use hard money lenders initially to fund your deals and then refinance after you've held the properties for 6-mos. to a year. They typically lend between 70-80% of value. They are more expensive in terms of interest and do charge hefty points. However you pay for the convenience of getting fast cash and most are not credit score driven. Many can also close quickly (such as 3-days to a week!). Most will let you borrow in the name of your LLC so the mortgages don't show up on your credit, however you will likely still have to personally guarantee the note.
You will also have to find a lender who will do loans in the state you're looking to invest in. Your California lender may not want to or be able to lend in Georgia for example. Likely in CA there are many.
I've also never heard of a lender doing non-recourse lending unless it was a big commercial deal or large multi-family but possibly someone who is well versed in non-rec. can answer that better than I.
From your post, I assumed you were looking for SFR???? If I guessed wrong, I'm sorry but will leave the info for future readers! :D
What type of properties are you looking to buy?
Hopes this helps some!