Painesville, OH · Member since 2014 · 2 posts · 0 votes
I am 20 years old, currently working in a hair salon making decent money but just starting out. My income looks small, but my tips make up for it big time. How do I get approved for a loan on a house when my income "Looks" scarce?
Your credit score will be very important also. A business loan may work for you as they look at debt to income ratio and will take into account the income on a rental home to pay back the loan. I would go talk to several small community banks in your area and check out your options or you could fins a money partner and do a joint venture with them. A percentage of the profits is better than zero. Hope this helps you out.
Real Estate Investor · Kansas City, MO · Member since 2012 · 397 posts · 187 votes
12y
@Terry Hershberger is on the money ... here is my thought:
Alyssa, start saving. Whatever your rent is, figure you can have a nicer or equal place for what you are paying in rent. Like Terry said, go start talking with community banks, and most importantly (community or not), banks that do their loan underwriting IN HOUSE. This is vital. You go several months chatting with bankers while you are saving like a mad woman. Once you find the right fit you explain to the highest person in charge (and I would suggest dressing in your best professional outfit and setting a meeting with the highest person at the bank) and explain that you are a real estate investor, currently working with other investors, but looking to group your business.
Next, you explain you have $2, or $3, or $5k, (this is important) to put into the bank, and its part of your current money. The banker will say they appreciate having all people, and yes, its nice you have deposits. You explain you will have thousands more as you grow your salon business, as well as your real estate business.
Step Three, buy a house/duplex. Make sure the bank does FHA loans, or something similar, unless you want to be prepared to do 20% down ... make sure you understand exactly how they structure their loans, and be ready to make a move once you have the funds to do it. If you get a duplex, get the best renter possible, and pay your rent just as you were, paying yourself, and letting the tenant pay your mortgage/utilities.
Now you own a property, you have established a relationship with the bank ... and you have your first "deal" under your belt...
Painesville, OH · Member since 2014 · 2 posts · 0 votes
12y
Luckily I have good credit due to being extremely responsible with my bills, credit card payments, student loan payments, car payments etc. It works in my favor having good credit history, and being able to save for a bigger down payment due to cash tips. I'm just worried that banks would be hesitant to lend me money because of my age and lack of a huge income history at this point. Thank you for your advice it's all very helpful! @Terry Hershberger & @Nathan Brooks
Age should not be a factor. Give it a try. @Nathan Brooks gave you some very sound advice. Go for it! And don't just ask one bank. Some will, some won't, some are waiting on you to ask! Best of luck! If you need any advise in the future as you investigate if they will do it, feel free to ask!
Rental Property Investor · Cypress, CA · Member since 2014 · 229 posts · 47 votes
12y
Additional method is to claim all as income including tips, so you can track your income through tax returns, however this can greatly have a impact on your tax situation. When i was a server, we would keep track of our tip income and would report it to the IRS.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
12y
Welcome to Biggerpockets!
We are buy and hold investors. We got started really young as investors. I would start reporting your tips on your taxes. Personal properties loans are usually much easier to get qualified with. Also go talk to credit union or mortgage broker rather than a large bank. I find those are the most lenient. We got started with buying personal. I have many friends who bought personals and than rented out all their extra rooms paying their mortgage.
Another great resource is to check out the signatures of those who comments you enjoy. My website/blog that I just launched is all about land lording, self management from long distance, buying class A properties and turning them into rentals with lots of other good stuff :)
I look forward to seeing you around the site and learning a lot!