Best way to get unconventional financing in my situation?

Question

Hello BP community, I am currently a new investor here in Columbus, Ohio and I am looking to house hack a multifamily. I currently have a 33K/year salary. However, this is a 1099 job position. I'm a recent college graduate and was hoping to use my prior 2 years of college experience to fulfill the 2-year work experience requirement.I've talked to a number of conventional lenders and they've told me that because it's a 1099 (not a W2), I absolutely need 2 years of experience.

I talked to my employer about this and they stated that they will be transferring me from a 1099 to a W2 later in the year (but no specific date stated). Because of this, I am now exploring unconventional financing ways to fund my first real estate deal here in Columbus. I have a ton of assets and cash on-hand (well over 6 figures), but I just don't have the "stable" income necessary to get conventional financing. Here are the different options I've thought of:

1) Reach out to Non-QM lenders - I was thinking of reaching out to non-QM lenders and working out a deal with them where they can collateralize my assets (cryptocurrency, cash, or etc) OR they can offer me a DSCR program. I was told that non-QM lenders mostly provide loans over 500k and right now because of the pandemic, non QM loans are nearly impossible to find? Not sure how accurate this is!

2) Reach out to portfolio lenders/local CUs - I was thinking about reaching out portfolio lenders and local CUs to see if I can work out a deal to collateralize my assets or if I can hold my cash in their bank or something... would this work?

3) Finding a partnership with someone who has a W2 position - The thing is, I have more than enough cash to do 20% down and it feels like I would be getting into a partnership just for a W2 status, which doesn't seem like a very good tradeoff to share everything 50/50 (especially when my employer will be transitioning me to a W2 later in the year). Of course, if the person had a lot to offer, I would be super open to partnering.

4) Use seller financing?? - but then again, it seems like deals with seller financing are very rare to come by so I don't know how useful it would be.

5) Wait until my employer changes my 1099 to a W2 later in the year (again, no specific date as of yet)

I'd love to get your guys input on my situation and what route I should go with. Please let me know which choice has the most likely probability of working out and the one that would be most worth my time! If I'm forgetting something, please let me know.

If you're in the columbus area and can refer a good lender that can help with my situation, that would be awesome too.

Griffin Schermer · Answer

@Jimmy Lieu I think you could very well take any of the routes you've listed. I think it depends how quickly you want to pull the trigger. If you have a deal ready to go then you probably won't want to wait for 1099 to transfer to W2. If you have time to negotiate, find deals, and build relationships you can find seller financing and/or reach out to lenders until you can find someone who will work with you. I think you could find a partner with a W2 job and if you must give up 50% then you need to find someone who can provide other services in lieu of payment. It also sounds to me like you could start BRRRRing today. If you have 6 figures in capital there are duplexes, SF, and foreclosures all over the Columbus, OH area waiting to be BRRRR'd. You could begin scaling this way until your W2 transfers over to then go after bigger deals. I think you have lots of great options to choose from. Good luck!

Brandon Sturgill · Answer

@Jimmy Lieu Sourcing your own deals may be your best option for now...at least until you get your income squared away and can qualify for a bank loan. I'd be glad to share some more resources on seller-financed deals...that's always the best way to acquire holdings.

Brandon Goldsmith · Answer

I agree that seller financing is the way to go when in this situation. It will get you into real estate investing faster and in the case of investing in Columbus, the sooner you get into the market the better. @Jimmy Lieu

Remington Lyman · Answer

You should just become a Realtor in Columbus, Ohio

Armin Nazarinia · Answer

@Jimmy Lieu- I was in a similar situation as you a while back and what I found worked was a portfolio lender who you can build a relationship with. They provided me financing which I was able to refi-out of once I got my 2 years experience and it was considered stable income. They essentially put me on a 5 year balloon with no pre-payment penalty. Higher fees but it was my only option at the time.

Not to mention if you have over six figures, would it be possible to purchase a house cash and finance money out of it later? It's no the best use of your money necessarily but would get you a few steps forward. I think it depends on your goals in investing and how you want to live.

Best way to get unconventional financing in my situation?

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