Just started a new business. What are best investment options?

[Steve B.]

After getting laid off from another job about a year ago, I opened a music lesson school. I’m already profitable with a monthly cash flow of $6k to $8k. Since my time is flexible, I want to get into real estate investing. I live in a single-family home that Zillow has valued at almost $700K and at least $550 of that is equity (I bought this in 1999.) I also have about $800K in savings, of which about $250K is non-retirement cash investments. I am 57 years old married with two kids graduated from college. I have no other debt other than my mortgage balance of about $130k.

So the questions I am trying to answer are, what is the best way for me to finance a real estate investment (especially considering I just started a new business and don’t have long-term verifiable income)? How much money should I invest? And what types of properties should I be looking at and where? My ideas are all over the map, literally. I just got back from Puerto Rico where my friend has an Airbnb rental that’s doing fantastic. I also have a daughter at home who would like to move out so thinking maybe I could buy a place she could live in. I’m also very interested in having a rental in Hawaii.

I know that’s a lot of information, but hoping someone can give me some ideas!

[Alex Turner]

Hey Steve, 

Sounds like you are in a very strong financial position to start investing. 

Your biggest hurdle is qualifying with self-employed income with only one year of history. There are loan options for 1 year self employed that require around 20% down payment. 

Another option would be to look into DSCR loans. These are investor specific loan where the property is what qualifies the loan rather than your income itself. Again these product will require 20% down payment.

Finally, there is a loan product out there called the community mortgage, this requires 20% down payment and does not require income verification. With this program you have to purchase a primary residence, so this may be a good option to help get your daughter in Hawaii into a home that you can eventually convert into an investment property. 

So bottom line, you should look to have 20% down payment saved but more is always better ;)