Updated about 4 years ago on . Most recent reply
First Rental Property
Hi my name Is Kyle and have been presented with an opportunity to possibly invest in my first property. Last month I ended up quitting my job (didn't like working for my boss) and managed to save up over 10k... I'm 23 and have "good" credit of around 630-650. Would it be a good idea to even start analyzing properties? Does not being employed affect my chances of getting a loan? I obviously plan on going back to work but not at this moment. My biggest concern is if i would be able to get approved. I do plan on doing a long term rental, and possibly house hacking... i'm open and willing to do what it takes to get into a property, looking for a little advice, thank you all!!
Most Popular Reply
Hey Kyle,
I hate to be a Debbie Downer but it is not a good idea to quit your job when starting to invest in real estate. For conventional loans, your employment and income will be a huge factor in the bank deciding whether to loan to you or not. One option is looking into a DSCR loan which is based off the income of the property. But I am going to be bluntly honest with you:
* In the future, do not quit your job without a plan. You may put yourself into a hole that is hard to dig yourself out of
* "Didn't like working for my boss" is not a good reason to just leave a job. Many of us do not like working for our bosses, but it is a short term sacrifice we must make in order to springboard our real estate investing.
* Depending on your market, $10k is not a lot of money to start purchasing real estate. If you were employed, you could possibly get away with an FHA loan, but with no job, you may have to figure out how to come up with a 20-25% down payment for a DSCR loan. Also, if you were employed, you would still be required to have some reserves in the bank to pick up a property with a conventional loan.
On the flip side, there is always a way to make something work. If you decide to stay unemployed for a while or permanently, you will need to become creative in the way you obtain property. Maybe you could look into wholesaling to start, in order to build up your funds. Maybe you could partner with another investor and pick up property that way. Maybe you can work with a family member. There are a number of ways to do it, but you will have to figure it out.
Lastly, I have no right to tell you whether you are right or wrong for your choice so please forgive me if I come off that way. Just giving you feedback based on my experience. My recommendation, start with the end in mind. Think about where you want to be in the future and develop your plan backwards from there.
Good luck on your journey!