Williamsburg, KY · Member since 2017 · 15 posts · 4 votes
So I have access to a pretty good amount of money 100k+ and I want to be able to use that to finance deals in the 200k to 300k range.
How easy is it to get a loan with 30%+ down payment but unstable business income?
Who should I goto for these kind of loans? Credit unions, big banks, online???
You will likely not get a loan with unstable income and with 100K down on a 200-300K property you will find it very difficult to achieve positive cash flow due to the opportunity value of the dead equity. Rents simply will not be high enough.
100K equity will reduce the true cash flow by $833/month (10% opportunity value of cash).
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
Stated income. Some banks can lend you money if you have account and large deposit with them for awhile. Credit score needs to be nearly perfect though.
DP does lower the mortgage however you are buying what amounts to artificial cash flow at a very high premium.
If a mortgage is at 4% then you are only saving 4% by paying down. Cash however has a opportunity value of minimum 10% to investors. This means you are losing 6% on every dollar tied up in a property. For every 100K of equity you must deduct $833 off the top of your rental income before any other deductions for cash to earn it's keep.
If you view cash as having no value then you are making a 4% return on your equity. Not worth crossing the street for in my opinion. Therefor equity kills your cash flow.
Cash property buyers (properties over 50K in value) or those that pay down/off a rental property lose money, they do not make money. They take a asset and turn it into a liability.
Lender · Philadelphia, PA · Member since 2014 · 92 posts · 45 votes
8y
You could easily qualify for a stated income loan via soft or hard money. For these types of loans, income is important and cash typically does not need to be seasoned or sourced (depending on the lender).
Cash is kind and most lenders want to see “skin in the game”, which it sounds like you have plenty of. Working with the right lender, obtaining a loan should be a breeze!
Let me know if you have any questions.
Williamsburg, KY · Member since 2017 · 15 posts · 4 votes
8y
Thanks for the reply everyone.
I would have thought that with a 30-50% down, getting your first loan would be pretty easy.
What requirements do banks look at when making loans to business owners?
This will be my very first loan under my name.