Good business income, no personal income - financing options?

Question

Down Payment: $500k-1m (hoping to stretch this across the maximum # of properties as possible)

Business Income: 300-400k net profit (Only 1 year of history so far)

Personal Income: $5-10k a year

Personal credit: credit score is great, never had debt, but only have 1 credit card with minimal history

Target Property: Single Family Homes GTA West (no cash flow)

Experience: Father has been a real estate investor since the 80's, but no personal experience yet

Hey everyone, I was looking for some help on my financing options for getting into real estate. My situation is quite unique and I haven't been able to get much help on it. My main issue is I don't have much personal income or personal credit history and from what my banker told me this will be a problem in terms of getting financing for multiple single family homes. She did mention something about giving 35% down as a business owner for a personal residence, but I just wanted to make sure I explore all my options and use the right amount of leverage.

I don't want to be putting all my money just into one property, I'd rather invest my capital into multiple properties.

What would some of you do in my situation? Should I look outside the GTA and get some cash flow to improve my debt coverage ratios for the bank? Will the bank take that into consideration if the property is getting more rent than is needed to cover the expenses?

Rick Laszlo · Answer

Lend out your money ....low loan to value properties

You can earn more than 7%

You can find 12 to 18% customers who pay more on credit cards....will use property to lower their payments

Marc Middleton · Answer

If you want to use the property as collateral and the property's DTI ratio instead of your own, then you'll need to find cash flowing properties. Usually 7 caps or higher will satisfy them and expect about 30-40% down with a personal guarantee. I know some lenders that lend based on the value of the property and the income it brings in with no personal income verification required. Rate are probably 6-9% depending on the LTV and length of the loan.

Get those trade Lines up so you can get better financing in the future. Usually 2-3 cards and a car or something 'installment' will do the trick.

For business income, you'd need a minimum of 2 years showing that kind of profit on your income statement.

Get those trade Lines up so you can get better financing in the future. Usually 2-3 cards and a car or something 'installment' will do the trick.

For business income, you'd need a minimum of 2 years showing that kind of profit on your income statement.

Good business income, no personal income - financing options?

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