Want to start investing but can't get approved

[Alick Patrick]

Hi! I'm a newbie. I had two properties that went into foreclosure or short sale 6 years ago during the housing market crash. Up until last weekend I didn't think I can get another property again but due to an unexpected incident a broker run my credit and told me that I am qualified to get a property--with 3.5% down! Thus, I started looking. To cut the story short, I ran into a thread here at BiggerPockets and saw a real estate investor that have properties at TN for $80,000 or that can generate good cash flow. I was surprised because I'm from L.A. so the cheap properties I've been seeing are on the $200,000 range. With that price minus just the 3.5% down payment that I'll be putting down I don't see much cash flow coming out of the properties.

I know it will be my first real investment property and there may be a lot of problems having to have a property management company manage a property that is not local to me but I'm willing to take that risk for now. I prefer that risk over the risk of purchasing an expensive property in L.A. with little to no income being generated.

Anyway, so I called the guy and was sold to make a purchase. I asked him if he knows any lender that can assist me with a loan because the broker that told me I was approved said I am only approved for properties around Los Angeles. He gave me a couple of lenders and I started to work with them. So far one stated that he cannot approve me because my foreclosure fiasco 6 years ago is still on my credit report, and the other has been unresponsive after I provided her all the information she needs so I'm assuming now that I am also not approved.

Can someone please kindly advice me if there are other options I can take to get approved for a property in TN? Actually, any state would do too. If you have cheap income generating properties to sell and know of a lender that may be able to approve me at your state please advice.

[Shane W.]

@Alick Patrick adding to what @Lumi Ispas is suggesting. House hacking as they call it would be an awesome way to get back into the game. Plus it will still comply with the FHA rules regarding owner/occupier.

I've been looking at MFH's around your area for the past few months and you'll be looking around the $700k mark and higher for a fourplex needing work. So with 3.5% down that's still $24k plus closing costs (which is a lot in this price range) to get your foot in the door. You could of course find a run down property, live in one unit while fixing up the other units, but then with such a low down payment you would be relying on your own income to pay the expensive mortgage. You could also aim lower and go for a duplex or triplex?

I know @Matt R. is in the process of doing something very similar to what you're looking to do.

I would reach out to these people and see what they recommend.

I'm also a new investor so by no means an expert, but keen to network with other LA investors.

Good luck!