Louisville, KY · Member since 2014 · 60 posts · 3 votes
My wife and I are both self employed so on paper we don't show enough income for a loan for a property. This would be my first property. I was looking into a turnkey rental. Ideas? Keep in mind I'm new here and so would prefer details please.
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
11y
How many banks have you shopped at? Do you have any cash? If you income is to low are you sure "turnkey" is the way you want to go?
I would encourage you to seek out at least 3-4 small time local banks and ask them how the can help you in you situation, you might be surprised at the creative ideas you can come up with.
We baught our last forclosure at a huge discount from market value for only $1,800 out of pocket. Thanks to our local banker!
Investor · Louisville, KY · Member since 2011 · 279 posts · 248 votes
11y
@David Zachery I'm from Louisville as well. Let's see the deal and the numbers (there's a dedicated forum for that) so we can make sure it's a winner. I know the 'ville quite well and have nothing but tons of useful opinions. Ha!
Investor · Louisville, KY · Member since 2011 · 279 posts · 248 votes
11y
I'll second Oscowicz as well, River City is great and flexible. BB&T has some quality products that are less flexible and I could turn you onto a mortgage broker for more conventional stuff.
I've only tried one bank and that was recommended by the investment group that helped me find the property.
Thank you @Steve Osowicz , I'll look into river city and action loans.
I'd be pretty leery about action loans. I've heard a lot of things about gus goldsmith and all have been bad. I've never personally done business with him but from what I've heard may not choose to even if it were the only option. River City might work with you, but I went to them with 3 different deals over the course of 4 years and they turned me down for the first two and offered terrible terms on the third. I think there are better "local" banks, try calling or googling to see if you can find banks that don't sell their loans to Fannie/Freddie. The requirements for those two (which is where most loans end up) are very stringent and it sounds like you may not qualify.
I'm also interested in some details about the deal - I haven't heard of any turnkey companies in Louisville and would be curious to see a local example.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
11y
Are you buying this as a personal property or pure investment? We got started buy living in home and than renting them out when we were transferred. This is a great way to get started because getting qualified as a personal is a lot easier than a rental!
When you are in the acquisition stage and need to show income. There is sometimes the discussion of taking less deductions in order to qualify for loans.
Louisville, KY · Member since 2014 · 60 posts · 3 votes
11y
The prop is in Birmingham, cap is just over 10. Tank you @Michael Seeker I wouldn't mind moving like that if I didn't have kiddos, but I see the good in that technique.
Real Estate Broker · Louisville, KY · Member since 2014 · 121 posts · 91 votes
11y
@Michael Seeker I have had minimal dealings with him, never done a deal, but I have spoken with him do know he is aggressive about payments. Hate to hear that about your experience with River City, that is normally who I refer to.
Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
11y
One of my first deals was an OO 4-plex. River City didn't like my income and assets - I was just out of college making about $60K and had no debt but very little in assets. Basically enough to purchase the building and a few months of reserves. I ended up getting a conventional loan on that one. The next time I reached out to them was for a refi on a 6-plex and they would not do any cash out (even though I had about 40-50% equity) and wanted to charge 6-7% interest even though the DSCR was around 3.5. Ended up going through another local bank for that commercial loan with 80% LTV and 4.5% interest.
This was 3-5 years ago when lending was much tighter, so they may have loosened up quite a bit since then.
My understanding about Gus is that he owns a lot of property and most of it came through foreclosing on borrowers. I never have any issues making payments, but would hate to be borrowing from somebody who may prefer to take the property over my payments.
For the deals mentioned, I went through Your Community Bank and First Harrison Bank. Both are a bit smaller and tend to change their lending appetite a fair amount. They may not want to make a certain loan today but could be wide open to it 6 months later.
So am I correct in that every time these lenders look into my info, they pull my credit? And therefore its a hit?.
Being self employed is a drag when it comes to banks, unfortunately
It sure is a drag. I use mostly private money because I just can't rally when it comes to dealing with banks. The last bank loans I got were when stated income was still a thing. I already jump through a ton of hoops to fix title and legal problems so have no energy for loan apps and income verification. It's time for me to get over it, though, because banks are where it's at for low rates for long term holds.
Flipper/Rehabber · Clovis, NM (88101) · Member since 2015 · 11 posts · 1 vote
11y
I faced the same issue with my first home purchase. I was 22 just out of college and made a teachers salary with a small business I started in college. I didn't have 2 years tax returns but found a great first home. Very fortunately my folks did a non-occupier co-borrower loan with me. Almost every financial institution will do this type of loan. We did it with an FHA so I only had to do 3.5% down.
Purchase price was $116k. The first year I didn't do much to the house. I had room mates who ended up paying about 80% of my mortgage. This allowed me to save up and get married and have a little left over for rehab. Sweat equity and about $10k in materials gave us a sales price of $178,000. This helped us buy 4 more houses over the next 2 years. It really helped get the ball rolling. Finding the right first purchase is very important in this equation. Don't let emotion play a role.
Bottom line - play your cards right and you could be a big player in the real estate world in a few years.