Bartender and aspiring investor - how do I get financing?

Question

Hey everyone,

I'm a young guy in my mid-twenties and looking to buy my first investment property, an REO in the Denver metro area. I'm keeping all my options open whether it be to fix and flip or fix and rent. Here's my problem, although I made great money in the last year working for an investor (who paid me cash), tending bar and collecting rent off my property back in NJ (which was passed down to me from family), it was all cash. My W-2 shows nothing but the $2.00/hr I made from tending bar. I have a respectable net of savings and will have capital from the property once it sells (it was mortgage free).

Do I have any chance of obtaining financing or am I going to have to do an all-cash deal? Can I show them the capital I have (assuming I sold my condo back east)? I'd rather not say the number but it will be a significant amount of money, along with what I've saved the past few years.

My #1 would be to find a duplex/triplex/quad, live in one and rent out the others. This would get me any favorable tax incentives for being a first time homeowner. I also am very open to buying a single family REO, live in it while I rehab it and then hope to flip.

Sorry if this was long. I appreciate all your time and assistance, thank you!

Account Closed · Answer

it's definitely possible..i started out in a similar situation, bartending, had money in the bank, and terrible tax returns....hard money is a great option if the numbers work....another option is a small, local bank who will hear your situation out...i met a banker who gave me a commercial rate loan based on the appraised value after rehab...this is rare, and will take several meetings and smiles...good luck!

Anthony Nelson · Answer

I agree with what Bryan said. I am currently purchasing my 2nd and 3rd rental property, but after that I dont have anymore capital besides my reserves. I made a call to a local bank and spoke with there commercial department and they too are willing to lend on the ARV of a home as long as you have a few under your belt. The lender was willing to listen to my entire situation and give me plently of examples, even a commercial loan at 80% LTV.

Anson Young · Answer

If you have savings, a hard money loan is workable for you since you have reserves. Or partner up with someone on a deal.

Scott R. · Answer

If you didnt claim your tips or other cash income for last year, theres no way your gonnd get a loan as a home buyer, which is what you hint towards. Hard money would be your financing options, as well as owc type stuff. If all you claimed was $2 a hour as your bar pay, id be very worried about getting audited. especailly when you buy and or sell some real estate and have a more complicated tax return. Employers cannot pay less then minimum wage at any time, so if your tips dont add up to the minimum they must pay you more, so its assumed you made tips every day if they were able to pay you only minimum, little off topic but im also a bartender who got audited recently. Back on topic, theres several investors in the Denver area you should get ahold of, including Josh, and Jon. Why does it matter what the property sells for, its actually would be a good imo to put atleast an estimate of what you have to help get info on ideas, if you get $10k or $200k off this condo your obviously going to have different options. Nobody here really cares where you are, how old you are or how much money you have, generally they just try and give ideas and suggestions, but need to know where you stand and your goals/intentions.

Bartender and aspiring investor - how do I get financing?

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