Creative Financing Ideas Needed

9 Replies

So here's the scenario: My wife and I have been investors for about five years. We have a good sized portfolio that makes us good money, but it has also maxed out or DTI for residential loans. We recently purchased a residential property management company in San Jose, CA that is very profitable, but it's also part of the problem. We have a nice home in San Leandro, CA (About 30 miles North, between 1-1.5 hours in traffic). Because the business manages about 110 units, I am in San Jose nearly every day and I'm spending a large portion of my week commuting.

We want to buy a property in San Jose because it is central to the units that we manage and will take three hour trips for showings down to an hour. The problem is that even though we are making good money and financially sound, our DTI is through the roof, all the more so because it was an asset sale, not a stock sale, and so the banks consider it a new business, even though it's ten years old. We have about $200K to put down on a house that will be in the $600-$800K range. In reality, we make good money, about $300K/year, but $200K of that is from this "new" business, $50K is from my commissions as a real estate agent, and $50K is from my rental properties, a lot of which have been purchased in the last 12-18 months, so most lenders won't count them.

We considered going with a commercial/residential building that we could buy as a live/work space (still an option, but we haven't found many good properties). I know that we can go hard money if we keep under 65% LTV, but it wouldn't be worth it to me. Other options are Seller Financing or Creative Financing Options. We only need it for 16 months since we'll be at the two year mark where we can count the business income.

Does anyone know a California lender who goes off of common sense principles? Either stated income or hard money that isn't too expensive. With how hot the market is out here, Seller Financing isn't going to be an option. We make good money, but we have a ton of debt too, and most of the income can't be counted by using standard bank principles. Our total debt is about $1.5M, total assets about $2.4M. Monthly PITI payments; $9,800, Monthly Income: $25K. Thoughts Appreciated.

@Rob B.

What about lease option for a 2 year period?

Cant really do a HML for Owner Occupied unless you lie about living in it. With your numbers I could do a 12 month loan at 2.5% orignation and something like 7-8%.

Your best bet is probably looking for something creative, maybe look at finding a deal to live in for two years, then buy something to call home. Throw out some post cards to motivated sellers- no equity maybe. Foreclosures, whatever. Take something Sub2 for a couple of years. Dont know your market, but I could easily buy a house on terms with the right list and 1,000 post cards.

"Sell your house for 100% of appraised value in under 7 days, FREE special report tells you how"  Send that to low equity, foreclosures, absentee owners, etc with a phone number and email and you'll get bombarded.

@Rob B. , that is quite the quandry you're in.  Hard money lenders can't lend on owner occupied properties, so that won't work.  You'd need to find private money, which is very doable in the Bay Area.  

You also could market for a place yourself from a seller who is willing to carry paper or sell subject-to, but that could take a long, long, time in San Jose or anyplace else in the South Bay.  The marketing piece suggested by @Darrell Shepherd will not work.  Everybody has equity and there are virtually no foreclosures.  I can tell you from experience you need to send about 10-fold more mailers in the Bay Area than in the Atlanta Metro in order to get the same number of leads.  

Rob,

I just got this email from a loan officer. I believe she can help you out. Easy docs income seems like a good fit for you. Her email is below. If interested, PM me your email and I will introduce you to her. 

Hello Minh,

I hope you’re enjoying this beautiful Thursday.

Please contact me if I may assist with any loans types below.

Residential / Commercial / Business & Construction loan programs:

---- Assisted Down Payment programs
---- Recent Foreclosure, BK and Short sale (1 day after settlement or discharged for purchase and R/T refinance). It’s non-prime rate, not hard money rate.
---- easy docs income (non-prime rates, with bank statements for proof of income) for the true money making borrowers that cannot provide tax returns, (minimum FICO 620, minimum down 20%)
---- stated income / hard money, (no minimum FICO, minimum 25% down)
---- 97% LTV conventional loan
---- 95% LTV conventional loan with no MI monthly payments
---- 1/2%(half percent) down, minimum FICO 580 and above
---- 579 FICO and below, minimum 10% down
---- regular 3.5% down FHA, minimum 580 FICO and above
---- "A" paper Conventional, FHA, VA and No FICO
---- condo with insufficient reserve (no HOA cert required)
---- non-warrantable condo
---- non-owner occupied purchase with 15% down
---- reverse mortgage (no FICO and monthly payments)
---- stand-alone 2nd TD
---- Commercial: apartments (5 or more units), mobile home parks, self-storage, office building, mixed use, gas stations, church, land & constructions loans, etc…

I welcome any scenarios you may have.

Have a great day! 

Originally posted by @Darrell Shepherd :

"Sell your house for 100% of appraised value in under 7 days, FREE special report tells you how"  Send that to low equity, foreclosures, absentee owners, etc with a phone number and email and you'll get bombarded.

I live in LA where houses are 900K to 1.2 mil for a 1500 sq ft 3 B 2 B house, 1 car gar, small lot.  This is the land of apartments.

But if you are in a cheaper market, you might want to use a jot form to collect info on home sellers.

Here is a form I use to get sellers to give me ALOT of info about their house.


  1. See here where the form is pasted on a Lease to Own Website for Home Sellers
Originally posted by @Jeff Pollack :

@Rob Buffington, that is quite the quandry you're in.  Hard money lenders can't lend on owner occupied properties, so that won't work.  You'd need to find private money, which is very doable in the Bay Area.  

You also could market for a place yourself from a seller who is willing to carry paper or sell subject-to, but that could take a long, long, time in San Jose or anyplace else in the South Bay.  The marketing piece suggested by @Darrell Shepherd will not work.  Everybody has equity and there are virtually no foreclosures.  I can tell you from experience you need to send about 10-fold more mailers in the Bay Area than in the Atlanta Metro in order to get the same number of leads.  

 Jeff, You pretty much nailed it. The market in San Jose and surrounding areas is so hot that there's no point in trying methods like that. It's not that they're not available, it just that it would take a long time to find them and I don't have that time. Secondly I'm not looking for a lowball offer on a foreclosure property, I'm just looking for a creative way to buy a good house at a good price to cut down on my commuting. We just got a request to bid on a 66 unit complex in San Jose, so my workload is going to continue to increase. I'll probably end up using private money on a short term loan, 18-24 months. Either that or I'll hire a driver so that I can work in the car :-)

You know @Rob B. , it's funny you should mention a mobile office.  I know a real estate investor who bought one of those.  Does a TON of traveling.  He got a Mercedes Sprinter mobile office van done up to the nines for like $160k.  He said that with the deductions he could take for it combined with what he could sell it for used after 5 years he could basically use the thing for 5 years for free.

Be 5hat as it may, PM me with what you are looking for and where.  The more detail the better.  I market in San Jose, know a bunch of agentscthere, and know a lot of investors doing business there.  No peomises, but I may be able to help you out.

Cheers,

Jeff

@Rob B. You may PM me with your requirements, as well. I'll pass them on to a couple of Realtor friends, and keep my own eyes and ears open. 

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