I am a newly Real Estate investor and believe I have found my first rental property to purchase but am running into a small road block so I came here to ask for advice. The property I have found is a 100k asking price with about 40k rehab cost to turn into a rental property. I have about 30k saved up to put into this property as well.
I would like to ask for some advice to what anybody would think would be the best way to finance this property.
My other issue that I am getting when speaking to mortgage lenders is that I am a professional athlete where I play overseas basketball. My contracts are usually one year deals, 7-10 months long, and than come home for the summer and look for new deals to go back overseas. Mortgage lenders are explaining to me that it would be tough to get a loan because I won’t have any current or consistent proof of income, even though my credit is good. If anybody can help me find a way to work around this that would be great help.
Hey @Tyler Harris , welcome to the BP community!
To get into that property, your best bet is some kind of private money. You can partner with a more passive, capital investor, bring together family and friend money or get a hard money loan. The last is probably the easiest to get done unless you already have one of the other two lined up.
After rehab, you will want to refinance to pay off that private money. This is where you will run into trouble with your current income situation. I am not a lender but what I do know from speaking with many is that if you do not have W-2 income, you will have to prove two years of income through tax returns. If you have been playing ball overseas for at least two years and have the tax returns to prove that income is somewhat consistent over a long-term, then you should be able to get a loan. If one lender/bank says no, speak with another. Talk to multiple and you will eventually find one that is open to working with you and figuring this out.
Hopefully that helps a little. Please, feel free to message me anytime if you have other questions or just want to chat.
Another thing that you may want to keep in mind is that almost all types of lenders will be wary of someone owning and operating from overseas. Your best bet may be looking for someone to partner with that will remain local. It will ease any worries about you being overseas, and you can also try and work with someone with good W2 income as well.
You'll of course give up some returns, but having boots on the ground that you can really trust is really important.
for non-owner occupied properties, consider the Fannie Mae Homestyle or the Freddie Mac ChoiceRenovation.
For owner occupied 1-4 unit properties, consider the FHA 203k.
Lenders are tightening up their guidelines .... almost seems on a daily basis! Without the lender receiving a confirmation of your likelihood of continued employment, it could be impossible to get a traditional confirming mortgage loan. Used to be that if you had verified employment in the same field for 2 years even with different employers ... that was good enough to meet the employment criteria, but those days are gone.