Need a very NOT risky real estate loan with high DTI

6 Replies

OK, I have a situation in which I need to pay someone off to remove them from the title of real estate.  Basically I am currently building a large steel building, putting living quarters in it, and moving there.  I will then sell my current home in which I currently have a mortgage at 56K.  

The building I am building alone would appraise for 150K, and the land was just purchased 2yrs ago for 120K so lets assume at least 250K appraisal.  

I will own the land and building clean and clear.  

After completing the construction and moving there, I need a loan for about 60K against the property. The issue is unless a banker can see this as a wise investment, they would deny me as my DTI is high and my income on my returns is not that high.

I have never defaulted on anything and pay everything.  However my score is only a 700 because of my use of credit cards for investments.  However, I use them wisely and play the zero interest games, not 20%!

The property is ag property and I believe the ag dept may be able to do a loan for "ag" but they are a SERIOUS PITA.  I would rather get a loan traditionally but I need to figure out what angle I want to attack this.  from my perspective, my god, 60K against a property worth 250K??  how is that risky at all?  Who cares if I can repay??  

WOW, can I reup this question?  Did I ask something wrong here?  

How/why is a credit union going to look at this differently?  I guess what I need is something that can look more at my, my holdings, NOT my stated income, and the risk in an investment where they are only loaning about 20% of the value of a property.  

@Brad James

I'm not the right person to answer this question for you, but I'll provide some input. 

I believe the other person is suggesting a credit union (or any community bank), because they want you to find a local lender that will evaluate and approve the deal in house. Most banks, like Chase or Bank of America, have a specific mold you must fit into, and if you don't, you have 0% chance to even be considered for approval. At a small bank, you get to plead you case a bit to the loan officer. I'm not saying that you'll get approval, but a small chance is better than none. 

Other issues I see is that it sounds like you're in the process of building the building, therefore, there is no asset to lend against, other than the land. I believe you need a construction type loan for this activity, but this is beyond my experience and I can not offer any constructive advice here.

The credit card game is OK, as you already mentioned, its impacting your credit score negatively, but I think the larger problem is that it infers that you don't have assets, otherwise you could utilize them instead. If you do have assets, I would look into using them as collateral for the loan you need. It may be an easier way to go, with a small bank or a private lender. You could also try hard money, but it is very expensive.


-Christopher

A couple things.  I am paying cash for the building and will not even apply for the loan until the building is complete.  

On the credit cards, I have always liked UNSECURED credit because there is no trail of asset ownership and I don't have to deal the bank's BS of insurance, valuations, etc, etc.  I have an easy 6 figures in mobile industrial, vehicles, etc. I have not had a bank loan in yrs.  There is just too much red tape IMO!

If someone came in and actually looked at my assets and realized they overshadow my credit card stuff, they would realize I don't really have "credit card debt", I have "credit card investments".  

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@Brad James

Based on what you've said, I would think that you would be able to get a loan from a community bank after they review your situation. Call around, find out which community banks have commercial lending departments, spend a day and hit them up one by one. Have a professional presentation of your assets and liabilities and a detailed plan. You'll run into some 'No's, but I have a feeling you may find that important 'Yes'.

-Christopher

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