New to Board- Semi new investor with questions

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New to Board- Semi new investor with questions

Brad Clarizio
Flipper/Rehabber · Columbus, OH · Member since 2014 · 161 posts · 116 votes

Hey everyone,

I wanted to introduce myself since I plan to spend a lot of time here.

My name is Brad and I live and invest in Columbus, OH. I purchased my first flip house (condo) at the age of 20 and built from there, eventually cashing out when I hit my main goal. With that cash out, I bought and paid cash for 3 properties and bought a new house for myself, while retaining my previous house.

Currently, I own my personal home and 4 additional rental properties. However, I am running into an issue. Since I paid cash for the 3 properties and have a mortgage on the other (previous personal home) AND a mortgage on my primary residence, I've reached an unloanable status due to my debt to income (currently at 58%). 

I do work a full time job in Human Resources at one of the largest retailers in the world (think specialty retail bra's and underwear, ha!) that provides my primary income with the rentals supplementing, but until they hit taxes for 2 years (I bought them all in November of 2013) then my debt to income remains high.

Any recommendations? I am 24 now and these 2 mortgages are really hurting me, even though I only pay 1. I don't want to hit a stall on acquiring property, but until these rentals show up on taxes consistently, my lender is saying I pay out $3700 a month and only make a couple thousand more a month- AKA, non loanable.

Suggestions?! I'm sorry if I lost anyone, it is hard to sum up. I really appreciate any input. 

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Doug McLeodPro Member
Investor · Cypress, TX · Member since 2014 · 496 posts · 205 votes
12y
You can go to local banks and credit unions and ask them about "portfolio" loans. These have slightly higher rates and may require a bit more down, but you don't have to meet Fannie Mae requirements. Find other local investors through a local REIA or BP and see what banks are doing this. You may it may not qualify still, but it's a different set of rules. You can also find private money potential through the local REIA.
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  • Keith Anderson
    Real Estate Lender · Atlanta, GA · Member since 2014 · 48 posts · 9 votes
    12y

    Hey Brad,

    Are they in your name or LLC?

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    12y

    Welcome to BP community @Brad Clarizio  It is a great place to meet new friends and learn about various aspects of real estate and more. Here are a few recommendations for you:

    Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet

    Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts

    Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing

    Check out BP Podcasts: http://www.biggerpockets.com/renewsblog/category/podcast/

    If you wish to tag someone in the conversation on the forum, type @ followed by their name and then select that person below. He or she will be notified of being tagged so that the conversation will continue.

    Wishing you the best! 

    0Reply
  • Doug McLeodPro Member
    Investor · Cypress, TX · Member since 2014 · 496 posts · 205 votes
    12y
    You can go to local banks and credit unions and ask them about "portfolio" loans. These have slightly higher rates and may require a bit more down, but you don't have to meet Fannie Mae requirements. Find other local investors through a local REIA or BP and see what banks are doing this. You may it may not qualify still, but it's a different set of rules. You can also find private money potential through the local REIA.
    1Reply
  • Richelle T.
    Rental Property Investor · Columbus, OH · Member since 2014 · 340 posts · 111 votes
    12y

    @Brad Clarizio 

    I have called a few local banks and portfolio loans are hard to find but not impossible. I forget the name of the bank I found that had favorable terms since I decided not the finance that deal... Try banks out in the suburbs like Pataskala, Newark, etc. Keep us posted on any good ones!

    0Reply
  • Brad Clarizio
    OP
    Flipper/Rehabber · Columbus, OH · Member since 2014 · 161 posts · 116 votes
    12y

    Thanks everyone...I have searched for portfolio loans around here to no avail, but truthfully, I haven't tried too many. I got pretty far with WesBanco but was ultimately declined.

    I am in the process of pulling out 38k in equity on my primary residence to pay off my student loans. I'll eliminate $480 in payments per month for 8 years (8% interest) for a 4% loan at 10 years for $260...a net of $220 off my debt-to-income. Additionally, I am in the process of paying off my credit card debt. Does anyone know how long rent has to on taxes to be considered? After this year I'll have my second mortgage (previous primary residence, current rental) showing on taxes all year, so I'm hoping that $1040 payment is going to come off my debt-to-income. 

    Sorry guys, what is an REIA (I assume a RE investment agency?) and BP (business portfolio)? I guess I should start calling...

    Man, I feel like I have so many ideas and goals and the financing is getting me. Luckily I know I am certainly not the only one who has run into this. 

    0Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    12y

    Brad - welcome to Bigger Pockets (BP). I echo the suggestion to find real estate investment associations (aka real estate 'club') to join and mix with others.

    I grew up with neighbors with your same last name. Any that once lived in Yorba Linda, (Orange County) CA? 

    0Reply
  • Ben Leybovich
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    It's called - creative finance,@Brad Clarizio :) 

    Go speak to portfolio lenders.

    Hope this helps!

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    12y

    Brad- I find myself getting the most creative when I don't have piles of money or financing waiting on the sidelines for me. Maybe try some seller-carry's, lease options, contract assignment/wholesale deals, etc until you are considered 'seasoned' by the banks. Another possibility could be a self-directed IRA for those of us oldies! (we have rolled over/transferred previous 401(k)s). Tap those retirement dollars. Good luck and keep us posted!

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y

    @Brad Clarizio 

    welcome to the site.

    0Reply
  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    Hey @Brad Clarizio welcome to the site! It's great to have you!

    Podcast Guest on Show #92
    0Reply
  • Corey Liepelt
    Flipper/Rehabber · Dublin, OH · Member since 2013 · 134 posts · 40 votes
    12y

    Welcome to BP, @Brad Clarizio. A few people have suggested finding a local REIA (Real Estate Investors Association). I can't echo that recommendation strongly enough. It's a great way to network with local investors of all experience levels. Here in Columbus, the REIA chapter is called COREE (Central Ohio Real Estate Entrepreneurs). We meet on the first Tuesday of every month in Polaris. If you're in Hilliard, that should be on the way home from work for you. You can print out a free guest pass from the website.

    0Reply
  • Brad Clarizio
    OP
    Flipper/Rehabber · Columbus, OH · Member since 2014 · 161 posts · 116 votes
    12y

    Thanks again for everything. Corey- I am definitely going to give that a shot. I work in HR as my daily job so I definitely know the importance of networking. One of my best friends is an agent so I'll see if I can get him to tag along, too! 

    I am going to call other banks. Listen to the most successful people in the world- don't stop trying! I am sure I will find someone. 

    0Reply
  • Brad Clarizio
    OP
    Flipper/Rehabber · Columbus, OH · Member since 2014 · 161 posts · 116 votes
    11y

    So just as a brief follow up, you all were completely right. Keep trucking away and you will find the money. Luckily, I did. Here's how:

    I connected with a friend who works for a loan bank, Union Savings. We looked at all of my options and the smartest thing for me was to leverage equity from current houses. We re-financed my previous primary property (currently a rental) and my current primary property, taking them both from 2 separate 15-year mortgages to a combined (1) 30 year mortgage. With this, I received $47,xxx back in "surplus". I was able to score a (likely) once in a lifetime deal on a duplex in Columbus that appraised at 94k for nearly half that due to the couple retiring/relocating. 

    However, I did not have the money for rehab, so I worked with a separate lender (although affiliated) on a 20k personal credit line, allowing me to rehab both sides and have ~10k left over (property needed the basics: carpet, paint, some drywall and appliances). 

    Thank you all for encouraging me to keep going, as I was starting to think I wouldn't find money anywhere. Yes, my mortgages are now on a 30 year, but I am saving $450 a month (freed up cash flow) and already have both sides of the duplex rented for $675 a piece (acquired the house on 12/19). All in all, it was a about a net income per month of $1100 to do everything this way.

    Happy New Year and here's to a successful 2015!! 

    0Reply
  • Richelle T.
    Rental Property Investor · Columbus, OH · Member since 2014 · 340 posts · 111 votes
    11y

    congrats! Glad it worked out :-)

    0Reply
  • Dave VisayaPro Member
    Moderator
    Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes
    11y

    Hey @Brad Clarizio welcome to BiggerPockets and great introduction! See you around the site. Feel free to interact with everyone and yeah, happy new year! Wishing you the best!

    BiggerPockets
    0Reply
  • John HornerPro Member
    Flipper/Rehabber · Columbus, OH · Member since 2013 · 1k+ posts · 655 votes
    11y

    Congrats Brad, that's awesome how that turned out!

    0Reply
  • Jon HuberPro Member
    Rental Property Investor · Boca Raton, FL · Member since 2014 · 1k+ posts · 713 votes
    11y

    @Brad Clarizio

    Welcome to the community! BP has a tremendous amount of information to help you, but it is only available if you seek it out. Be sure to be as active and engaging as possible. Read blogs, post questions, and the podcasts are gold! The best free education you can get. Good luck!

    0Reply
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