Is there anyone who works for tips that actively invests?

Question

So I currently work as a waiter in the Pittsburgh area and I was just wondering if there is anyone in the industry that also invests in real estate? If so how are you qualifying for mortgages. For those that don't know usually a waiters hourly wage is a lot lower. I get paid 2.83 per hour and that's raised by claiming all of my credit card tips. Which can drastically fluctuate week by week. A majority of the money I make comes from cash tips witch is not claimed what so ever. I just passed my real estate test but I mainly got that for when I get started rehabbing I can buy and sell without having pay someone to do it. Down the line I would love to take advantage of the brrrr strategy but am worried that I won't be able to refinance if I continue being a waiter. If I were to start a LLC for rehabbing will those profits help me qualify or am I better off getting a partner who has a high w-2 income?

Ryan Howard · Answer

@Tanya Rotella

https://youtu.be/V27jZekRDcg

Watch that video when you get a chance. It's two parts and both are a little over an hour long. I would suggest waiting until you have time to watch both all the way through. Have a piece of paper handy to take down notes and mark down times of stuff you want to remember to look back over.  There's a lot of useful information.

Tanya R. · Answer

Hi Ryan,

I'm a bartender in a similar situation.  Athough I've run into dificulties getting my employer to verify my employment/income with a bank so I cannot qualify for a mortgage.  I keep track of my cash and get my taxes done and suggest you do the same if you want to invest but continue being a server.  You don't want to get audited and pay back taxes, and it's very hard to move forward without a verifiable income.  At this point I'm considering using hard money loans to do some flips to build up more capital, have you looked into doing something like that?  I'm also interested in how to utilize an LLC to get a mortgage for a multiplex.  I think we'd need 2 years of verifiable income from the LLC and we'd be subject to higher down payments to qualify for a mortgage, just something to think about.  I'd appreciate if you share anything you learn and I'll do the same.

Ryan Howard · Answer

Account Closed

Meaning a property with 5+ units or just a commercial loan? Thanks for your input

Steve Kontos · Answer

@Tanya Rotella

I built my business model around finding ways to fund each buy and hold deal.  I didn't wholesale or flip before purchasing buy and holds.

It depends on what type of investing you ultimately want to do.

Ian Hoover · Answer

You have options:

#1 if you make good money then you can report your earnings which is something most in your shoes do not do, I understand it sucks paying taxes but it can be beneficial on the finance side of things.

#2 You can always wholesale to get your foot in the door and build up some cash that you could buy a property with.

#3 You can find a partner that can get financed or has the cash however you will need to bring something to the table which would be your time, make sure you study the market you want to be in.

#4 You can do rehabs with private lenders and then commercially refinance, a bit trickier but it can be done.

The most important thing is you don't give up, come up with a game plan and execute it.

Tanya R. · Answer

@Ryan Howard

Well I'm glad you're taking the same approach I was thinking.  It's definitely reassuring.  Thank you for the suggestion on seller financing options I'll look into that as well.

@Steve Kontos

Since joining this forum I've started to see there's many creative ways to finance.  Would you recommend starting with flips vs trying to find funding for a rental?  Seems like it's easier to get short term private or hard money loans at this stage.

Jerry Kisasonak · Answer

If you're going to use bank financing consider partnering with someone who has a good W2 income, or do flips with private money and build up some venture capital.

Steve Kontos · Answer

@Ryan Howard

@Tanya Rotella

Hi guys.  I actually started my real estate career in Pittsburgh but anyways welcome and here are my two cents....

The truth is if you go into commercial lending (that's 5 units or more), the banks generally care more about how the building performs rather than you.

I highly recommend finding other ways to leverage rather than the "save and buy" approach.  If you go with the "save and buy" approach it will take you years to build a portfolio.  You can leverage through credit, partnering with someone, etc.

Pittsburgh's real estate market is on the up and up right now so finding deals are a bit tougher BUT not impossible.  I hope this helped in some ways.

Ryan Howard · Answer

@Tanya Rotella

Yes I am about to get started the same way. I am searching for a private lender though in order to avoid high interest rates and loans from a hard money lender. But from everything I've read online I'm assuming what you said is correct about the 2 year wait for an llc. I'm thinking that won't be a big deal because if everything works out the way I want it to after two years I should have a decent amount of cash saved up from doing flips to invest in buy and hold. You may want to read up on seller financing options if you want to get started with buy and holds right away. That's definitely another way around it.

Is there anyone who works for tips that actively invests?

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