Loan Inquiry for People with Unstable Income

[Jonny C.]

Hey everybody!

I'm a long-time lurker and voracious reader/listener to BP. Long story short, I left a secure hospital job to be a Realtor about a year ago. It has been a challenging but rewarding year. I don't think I would've finally given myself the push to get into RE investing if it wasn't for becoming a sales agent.

From any one's experience, I'm curious as to how difficult it is to get a loan if your income isn't stable? The more experience I get, the more I'm starting to get consistent business. But... I mean it's still sales.

However, my goal is to start getting some investment properties around the Bay Area. I currently live in SF. I have really good rent through a family friend so I won't be leaving any time soon.

I have zero debt, decent savings, credit score of 820. 

I was thinking of an FHA loan and then using some money I have saved up to do some light rehab. I'm interested in 2+ unit buildings in the BA. As long as I'm net cash flowing, say +$200/door a month, should they OK me? Is +$200/a door with an FHA in or around the BA wishful thinking?

My passion is RE investing, I've been hooked for a while and find it really inspiring that people (@J. Martin, etc.) from around the Bay Area are doing, what I used to think, was impossible if you didn't have a huge bank roll.

Anyways, is this doable for a person in my situation? Or should I got back to a 9-5 in order to have some steady income and then apply for the loan? 

My goal is to have a net positive cash flow of 24K/annually within a year. At this point in my sales position, that net of 24K/annually + my sales job would put me in a more comfortable place. I'm fine with being frugal for a while, so long as I can take those commission checks and keep reinvesting. 

Now, I'm rambling lol. Thanks for your time everybody! I'll be at the next SF MeetUp. Hope to meet some of you there. Grazie!

-Jon

[Josh Caldwell]

You are in a good position, you credit is excellent, you have no debt, the problem as I see it is that you live in a very expensive city and its is generally hard to get decent cash flow in SF. 

So I have two comments, invest somewhere else.  Find a low cost of living city and buy there.  There are enough guys out there that will sell you turnkey cash flowing rentals for that to not be much of a problem.  You will need to do some due diligence to make sure that you arent getting screwed.

Second comment, its a bit harder to get money from a bank with an unpredictable income.  That being said, you are on BP, there is no reason for you to go to a bank.  You can jump into the world of private money or learn how to negotiate owner financing.  Its a little harder than the traditional way but nobody cares what you income is in the investing world.  For us its all about deal structure. 

To your success

Josh