Single Mom w/ Low Income Looking for Rental Properties

[Ellen Campbell]

Hello BP community! My name is Ellen and I'm a real estate agent. I am newly separated from my partner and starting out in real estate investing as a single mom with low 1099 income and few assets. I have identified a few multi-family rental properties that I could owner-occupy in order to use the lowest down payment as possible (3%) and generate positive cash flow. I have zero retirement savings and am eager to start building a passive-income portfolio so I am not a burden to my child.

One of my biggest hurdles is that I need to boost my income so that in the bank's eyes I can afford the mortgage payment BEFORE collecting any rent. The other hurdle is a putting down a bigger down payment, which I can't currently afford. 

I have looked into DoorDash as a way to boost my income so that I retain flexibility in order to continue to be present for my child. I have also looked into borrowing for a down payment whether its from a personal loan, hard money lender, family, credit card cash advances, etc.

Are there any recommended tips, products, BP webinars/podcasts that address this kind of situation? Are there any other single income households that have overcome these hurdles?

[Cassi Justiz]

One thing to keep in mind is that you'll need about 2 years of steady income for a lender to "count" it for loan purposes. They are even more hesitant to count 1099 income as "steady" income. They will also take the annual average of your 1099 earnings. So even if you crush it this year it will still need to average out with the income from the previous tax returns. 

I would recommend trying to find a co-signer if that's an option for you. If you could get a co-signer that would help with some of the down payment, it would make things a lot cleaner. Banks generally will not allow you to borrow down payment funds. 
You can make a plan to refinance in a year or two once you are able to get your income a little higher for lending purposes.  

You might look into some of the BP Money podcasts or Choose FI. They have a lot of really useful information about finances.