W2 Income with new side business
Hi guys, currently I have a factory job I’ve been working for the past 6 months, I can push and work overtime to make 4-5k a month until tax season for my W2 (income would be 45k after taxes). Although, I was thinking about starting a pressure washing business on the side but this would reduce my income at my W2 job to around 30k for the year. Would this be a problem when I try to get my first investment property?
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@Izaiah Daughton
How are you paying yourself with your side gig?
Basically a lender will want to see income - if your doing it cash it will have a significant impact
Quote from @Chris Seveney:I would report the income as well when I file taxes. Just I heard you need 2 years for lenders to accept self employment income.
@Izaiah Daughton
How are you paying yourself with your side gig?
Basically a lender will want to see income - if your doing it cash it will have a significant impact
Quote from @Chris Seveney:If I were to use the brrr method instead and use hard money first are the lenders income requirements more lenient?
@Izaiah Daughton
How are you paying yourself with your side gig?
Basically a lender will want to see income - if your doing it cash it will have a significant impact
yes - this would affect your ability to qualify
Isaiah,
I know your situation, I have been there. Years ago when I was starting, it was hard to buy property when I owned my own company in the early years. There is a simple truth. "When you need money the banks say no. When you don't they want to give you money". I am working with a person who is in your situation. He has a great job working at the port (union) but he is an excellent AC guy so he has been laying off work to do his AC work.
I have worked with him for about a year now and he has an LLC, a real business, and a CPA and is recording all sales through his business. Unfortunately has only one year on the books. Lenders want to see two years with good records and possibly a business plan. Even with two years and a business plan the lenders will discount a new business by 25% meaning you get credit for 75% of the income.
You may be able to do both as he does now. He watches his hours at the port to be sure he can show a good steady income (that's important, no ups and downs). In the interim, he has obtained two business credit cards (not consumer) which permits him to finance his business without hits to credit.
Something you can do if you want to buy property now is to partner with someone who has good credit. Both of you sign on the loan and flip it to an LLC. You will get credit for paying on a mortgage loan which will help. Be sure your score is good or you will drag the interest rate down.
When you get past year two you should be sold. Be sure you have formed a company with the state and use a CPA, not an accountant. You will get there.
@Izaiah Daughton hello! You typically can borrow 4 x of your gross income on average (could be more/less depending on the debt you carry & mortgage program/taxes). I highly recommend for you to look into first time homebuyer grants and programs to help you with purchasing first property. NY state has plenty to offer...
NYC has its own 100k down payment assistance program:https://www1.nyc.gov/site/hpd/services-and-information/homefirst-down-payment-assistance-program.page
Feel free to reach out.