What Am I Doing Wrong?
I currently have two properties under contract that I got from foreclosure (two four-plexes that I am going to renovate and raise the rents).
I am getting financing for these properties with a construction loan. I have the good credit and the money for the down payment, but I don't have the W-2 for the bank. So I have been asking friends if they would co-sign on this loan (to purely borrow them for their W-2 income credentials) and in return for helping me qualify, I would pay them $1000/month while I own the property. I would handle the renovation, the marketing, the screening, and the property management -they would have to do nothing
The plan is to refinance into a permanent loan after the renovation is completed and when I refinance I am going to put it into an LLC. My co-signer's name would be removed from the loan, but I would still continue paying my silent partner $1000/month. I would only need their name on the loan for 3 months at most.
And no one is biting!!
Is there something wrong with the offer? What is the problem? Please tell me what I need to offer that I am not offering. Everyone that has turned me down told me they are not sure what they want. So I am looking for honest feedback.
Thanks in advance!!
@Brittany Sanchez how many people have you asked? Of those people how many are real estate investors themselves? If the answer to the first question is less than 15 and the answer to the second question is very few you would need to ask more investors
If you don’t have a W2 Income do you have 1099 or self employed income? You may have a hard time refinancing if you don’t have the income to support the refinance loan, if that’s the case that could be another reason people aren’t biting
@Caleb Heimsoth You are correct that I haven't asked a lot of real estate investors (I have asked a couple, but they believe they wouldn't qualify). I have only started my real estate investing career February 2017. My bank will give me some credit from my other income producing properties, but it isn't enough to qualify me. Once the properties under contract are up and running, then my bank will count that as income and that will allow me to refinance. It's the initial qualification to get the construction loan that is hindering me from starting.
So does this mean that I am doing something right and no one wants to be a part of this deal?
Look to network more and establish good relationships. You’re either talking to the wrong people or don’t have a good deal.
Go to a local meetup, meet like minded people and see if anyone has interest as you build those relationships. Even if no one will co-sign you could partner on this deal with someone more experienced and learn from them. Relationship and experience points sometimes yield a better return than a single deal, especially early on in investing career.
Maybe there is a DP large enough to satisfy the bank lending to you, like 25%. You could then borrow a specific amount from a private lender instead of asking them to co-sign the whole thing.
Collateral for this loan will have to be against other property you own but may be a better option for you and them. You will have to let the borrowed money season in your bank acct for a few months most likely. Good luck!
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