How do you get funding if you’re income is not “bankable”?

[Jared Vincent]

I’ve owned a home for the last 5 years, with close to $120k in equity in it. However my income was been low since I’ve been an entrepreneur the last 2 years. Credit is over 730+. $15k in an retirement IRA. I found a real estate investment that produces good cash flow. What creatIve ways could I get the deal funded?

[Don Konipol]

@Jared Vincent The lowest rate, highest LTV and longest term loans go to those with (1) provable high income from a continuing source (2) good to great credit history and (3) adequate or better collateral. If any of those items are below par then while financing may still be available, it will be at a higher interest rate and a lower LTV. This makes great buy and holds hard to do as the ROi is lowered as a result and the deal may no longer produce a great return. This is why hard money loans almost never work long term; in fact they are usually provided as a temporary bridge for either fixing and flipping or repositioning or awaiting credit or tenant enhancement. Depending on your particular situation and collateral, the premium for these non conventional loans above interest paid on conventional A paper will be 2.5 points to 12 points - or more! Additionally your leverage will be significantly lower - 50 - 60 LTV instead of 80% or more. If after running these figures the proposed purchase still makes sense, you have two options to pursue. You can engage a mortgage broker to do the work of finding a willing lender and utilize his expertise and knowledge, or you can contact non conventional, private and or hard money lenders directly.