Trying to get my first property with practically no background?

Question

Hello, I have been working for over a year at a local real estate firm as an assistant (taking my license exam after the holidays). But I'm straight out of high school. This has been my only real job. And I'm labled as self employed, and have yet to do my taxes or even no where to begin. With that said, I have no idea if I even have a credit score! I make car payments, but the car wasn't in my name, since I had no work background. But over this last year and a half, I was able to save nearly $8,000. Now in my part of Texas, average homes are around $120,000. I am very eager to get my first rental property! Yet I'm estimating under $55,000 for it. I want to know (without going to every bank) if it's possible to qualify for any FHA loan, I'm assuming 635 is around the right credit score for most of those. But like I said, I have no idea if I even have one. But if I was to do one of those. I'd loveIin it a year and make any improvements needed then rent it out. So I still keep my loan. If not, are any private lenders able to help with my situation, or am I just better off waiting for my taxes and see wheee that leads? Thank

Daren H. · Answer

@Hayden Gerstner Whatever you figure out, you are already 10 steps ahead in the game. You are young, you have a goal, you are saving towards the goal, you are being proactive (by bringing your thoughts to the BP forum). Continue to educated yourself in REI, build credit, save, and before you know it, you will know it :) Just remember, REI is a marathon, not a sprint.

Ali Boone · Answer

Nope, sorry, I don't buy fixer uppers. My only thought is to find less of a fixer upper and just something for a good deal.

Steven J. · Answer

@Ali Boone , I'm trying to do that exact strategy but I hit a road block because FHA is using HUD guidelines which means I can't find a fixer upper per say. The property needs to meet certain requirements or they won't lend the money. Do you have a solution around this?

Ali Boone · Answer

Dude, you're rockin' it out. I love it! You are going to be really good at whatever you figure out.

You can find a duplex or multi (4 units or under) and live in a unit and get the FHA loan. Especially if it's a fixer.

Ilhan Dahir · Answer

Hi, What you can do is wholesaling for a while to accumulate money.Good luck with investing.

Steven J. · Answer

Hang in there and learn the ropes. Its impressive you're willing to start so young.

My suggestions is to continue to be involved on BP. Pick up the knowledge people are handing out for free. Use your current job as real estate training. Listen to the podcasts while you're sitting there entering data or what ever it may be, and take note of the books people mention to read. "Rich Dad Poor Dad" and "The E-Myth" are great books that nearly all interviewees recommend. I'm going to be rereading "The E-Myth" before news years so I can set up some new succint goals. I suggest you do something similar.

Jimmy Hong · Answer

Agree with everyone above, but regarding your credit, go to creditkarma.com.  it's a free site that will show your credit and much more.

James Wise · Answer

your going to have to wait. No bank or private lender will touch you right now. For the bank commission based jobs/self employed you will need 2yrs tax returns (minimum) to count your income. the car payments wont help as it was not in your name. Open up a couple credit cards asap. Use them every month and pay in full to avoid interest. If you cannot get a cc open one up where you pay an upfront deposit (250-500ish) The cards will give you a solidpayment history for when your ready to get a loan.

Bill Jacobsen · Answer

You just need to be patient.  Given your irregular income as a real estate agent you should have 3 to 6 months living expenses saved up as an emergency fund.  Then you can start saving up for investments.  By that time you should have the necessary tax returns.  Then it is time to invest in real estate.  Just my opinion.

Bill

Logan Zanki · Answer

Your first issue is no tax returns.  No FHA bank is going to write a loan with out you having tax returns. You will have to show two years tax returns and make sure that your accountant doesn't show a big loss because that will count against you. If you made 70k and had 20k in expenses the bank will only use 50k in income.  also if show 20k the first year and then 50k the second, they will just average it out to 35k as your annual income.

Your second issue will be that FHA doesn't write investment loans, unless you purchase a Multi family and live in one of the units.

You might have to find a seller willing to hold a private mortgage with 10% down for 2-5 years. Then refinance when you have your credit and income worked out.  Have a family member cosign with you for the private mortgage.

Hope this helps guys