Tipton, IN · Member since 2015 · 30 posts · 3 votes
Here's my situation:
I just graduated college in May, started my new career in June, and have been working there for around 7 months. I get paid on straight commission. I have saved up enough money to put a down payment on a rental property, but I am having A LOT of trouble finding a bank or credit union that will provide a loan without me being able to provide them with 2+ years of income history. I have been calling several local banks or credit unions but no luck so far...
Does anyone have any tips or advice on the best way for me to find financing for the property?
I ran into a similar problem trying to do my first house because my company switched me from w2 to 1099 when I moved positions. Mortgage people told me I needed to have 2 years self-employed (1099) before I could get one, I thought it was ridiculous because I had been with the same company for over 2 years, but it was a technicality they wouldn't let go. I ended up getting a 'business mortgage' that was similar to a regular mortgage, 15% down at 4.5% interest over 20 years. They still wanted to see all of my financial data to evaluate if I could handle the loan but they also understood that it's a business and the tenants would help pay that balance. Maybe talking to some people in the business department at the bank instead of the mortgage department would be helpful. Being able to pay a larger downpayment than typically required, thereby reducing the amount they need to loan could possibly incentives them.
Perhaps looking into owner financing would be another route. Maybe the banks of friends and family is something you could work into the equation.
Thanks a ton for taking the time to help out! That was a helpful response. I will give it a shot and start asking the banks if they would consider doing a business mortgage. I think what it comes down to is the fact that I'm just going to have to be relentless and keep asking until one of the banks says yes.
Thanks for taking the time to help! I don't think its the length of time I've been at my job that the banks are concerned with.. I think it's more the income history. I can only provide 7 months history of solid income, but I have technically been at my job for about 4 years. After I graduated, I just switched positions and started making a much more significant income. Any tips on how to get around their need for a longer income history?
Thanks for taking the time to help! I don't think its the length of time I've been at my job that the banks are concerned with.. I think it's more the income history. I can only provide 7 months history of solid income, but I have technically been at my job for about 4 years. After I graduated, I just switched positions and started making a much more significant income. Any tips on how to get around their need for a longer income history?
8 months ago were you in school or at another job? And if you were at another job is it in the same industry?
I was in school. At the time I was working the front desk at Lifetime Fitness as a part-time job to earn a little bit of money (which I did throughout college). Now I'm graduated and I work full-time as a personal trainer at Lifetime Fitness (the same company).
Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
9y
What size loan are we talking about here, ballpark? I know it seems far fetched but sometimes getting the run around from banks can be a good thing. As they say, necessity breeds competence. Your current situation requires you to solve this problem the hard way (possibly without banks) which will develop creative financing skills that will last you a lifetime. With that, how much money do you have saved and how much of a mortgage are you anticipating?
Thanks for taking the time to help! I don't think its the length of time I've been at my job that the banks are concerned with.. I think it's more the income history. I can only provide 7 months history of solid income, but I have technically been at my job for about 4 years. After I graduated, I just switched positions and started making a much more significant income. Any tips on how to get around their need for a longer income history?
I just re read your post and it looks like you'll need to show 2 years of w2 if that's how they're paying the commission. If it's 1099 you might be able to do 1 year tax return if you can prove you've been self employed for 2 years. You would need to show a business license or get a cpa to confirm this.
Rental Property Investor · Saint Louis, MO · Member since 2014 · 313 posts · 326 votes
9y
Consider looking for seller financing. Sellers listing their property as FSBO might be willing to consider it if you explain how it can save them on taxes, create an income stream, etc. You could network with a few local wholesalers and offer to pay them a finders fee if you close on one of their leads.
There are a ton of BP podcast episodes about creative financing and I feel like Brandon Turner always mentions he wrote a book about something....
I think you could definitely be right. At this point I'm just so ready to get in the game, I'm going to figure out a way. Typical homes in the town I'm looking in are $40k-$80k. I have about $10k saved up so as a ballpark estimate I'd say the loan will be around $30k-50k.
Brandon I've actually read your book twice! I love it. And I've listened to a ton of the podcasts. I've spent A TON of time educating myself, but have yet to take action. I am ready to get in the game and have stumbled across this roadblock, and now I'm highly considering a partnership or continuing to look for seller financing deals. I have considered house hacking, but I currently live rent-free so that doesn't seem to make a lot of sense. Any advice on what you think would be the best way to go?