How can I start out with cash in hand, but without income?

Question

Hi folks,

I am an early 30s male from Vancouver, British Columbia, Canada. This is my first post and I'm very happy and proud to be part of such an exciting and inspiring community.

I'm looking to invest in rental real estate in the United States, mainly because most markets in Canada are overpriced to high heavens, and finding something cash flow positive is next to impossible.

I have around $300k USD in cash and liquid assets that I set apart for this purpose. I have a stock portfolio and some other assets as well so I could come up with a bit more if I needed to.

My question would be, how feasible is it for someone in my position to start investing in U.S. real estate? I realize that finding financing will be harder due to having no W-2 income. I am looking to find out what financing options are available to me, and some advice on how I should proceed in my situation. I've owned residential real estate before (in Europe) and even renovated it myself and refinanced it, so I kind of know what I'm in for. However I'm not familiar with the U.S. process on anything real estate related. I'm trying to gather as much info as possible before I start planning anything.

I was recently laid off from my software engineering job here in Canada. I'm collecting unemployment (from Canada) at the moment, but I'm also looking for jobs in my field at the same time. Currently, I'm looking for jobs in my field in the United States for the sole purpose of having documented W2 income that I can use for financing real estate purchases. My end goal is to have a real estate portfolio that I can retire from.

I signed up for U.S. credit cards to build my credit score there and currently I have a U.S. FICO score of 730. My Canadian score is 800 (our range is 300 to 900) Lastly, I'm a Canadian citizen and I have no debt.

I would greatly appreciate any advice!

Sincerely

Oz

Marc Rice · Answer

I can connect you with some good local lenders here to discuss what is needed from an employment standpoint. Some lenders will still lend to you out of state with no issues even with a Canadian job. DSCR is always available too.

Josh Young · Answer

@Oscar Adams

You can buy a distressed property for cash, you can find these under market value because banks won't finance them, so the buyer pool is much smaller since it has to be cash/hard money loan; do a cosmetic rehab in cash, and then do a cash out DSCR loan that is asset based, so you don't need income to qualify. This will allow you to get some/most of your money back and you will have a cash flowing rental property. You need to speak to a Mortgage Broker about requirements on the cash out DSCR, especially being from outside the US there may be additional requirements.

Steven Silman · Answer

@Oscar Adams it's challenging to start doing but there are many Canadians doing this in different areas. There isn't really a blueprint for the US - each state has different rules and regulations, along with levels of appreciation, cashflow, etc. I'd suggest doing research to establish a handful of markets that fit your criteria (level of risk v reward, landlord friendliness, etc) and get to know each one well. Then make connections with local REI professionals and amateurs and starting building a team for that area. Wherever you decide to invest, you'll need locals to help, as detailed in out-of-town/out-of-state investing forums and books - many are on this site. You could also consider different towns and provinces around Canada - once you get out of Vancouver and Toronto, cashflow is usually better and it will be more straight-forward for you to do, especially you can value-add.

Simon Ashbaugh · Answer

Not sure where you're at in Canada, but you could get a few properties in Cleveland OH for 300K especially if they need work. Most likely it's a fairly short drive if you need to check them out/do some work on them yourself. Cleveland cashflows really well too.

Harrison Chow · Answer

Hey Oscar! I understand your situation and I'm glad to hear that you're looking to invest in the US real estate market. With $300k USD in cash and liquid assets, you have a good amount of capital to get started. It's great that you've owned residential real estate before and have experience renovating and refinancing properties.

In terms of financing, it can be challenging to obtain financing without a W-2 income. However, there are still options available to you such as using your existing assets as collateral or seeking out private lenders. You could also consider partnering with another investor who has the necessary income to qualify for financing.

It's good to hear that you're actively seeking employment in the US as having a documented W-2 income will make it easier to obtain financing. Building up your credit score in the US is also a smart move, and your current score of 730 is a good start.

As you mentioned, it's important to gather as much information as possible before investing in real estate in the US. I would recommend consulting with a knowledgeable real estate agent who can guide you through the process and provide insights into the local market. You should also research the tax implications of investing in US real estate as a foreign citizen.

Overall, with your capital, experience, and determination, it's definitely feasible for you to start investing in US real estate. Just be sure to do your due diligence and seek out the advice of professionals who can help you navigate the process. Good luck!

Oscar Adams · Answer

@Josh Young and @Nathan Gesner thanks for the reply, sorry if I gave the impression that my living expenses aren't covered. I'm covered for at least a full year if not more. Also, it's not difficult to find a job in my field, I could find one next week if I wanted to, but I want to spend some time learning real estate in the meantime.

Nathan Gesner · Answer

My question: why would you spend money, time, and effort on investing when you don't have income to cover your living expenses? I would spend all my energy on finding employment and stabilizing my finances before I invested.

How can I start out with cash in hand, but without income?

How can I start out with cash in hand, but without income?

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