No job, 800 FICO, 200k cash... can I buy rentals w/ 20% down?

Question

Hey guys, as the title says, can I buy investment properties with 20% down if I have no current job, but an 800 credit score and 200k cash? I have ZERO debt, only bills are car insurance and cell phone. Here's some more details on my situation and intentions:

Was working for a company for 3 years making $65-85K but quit in April 2018. Sold my house and took a 6 month sabbatical to travel. Now I'm back and living in a rural area where homes are cheap ($30-70k) yet rent is $800 plus. I'm considering many different options for generating income right now, including but not limited to investment properties. I'm really hoping to not go back to a cubicle if possible, and looking for ways to leverage my cash at hand.

I would be interested in trying a mixture of rehabbing and rentals, depending on the scenario. I'm a pretty well rounded handyman at this point, having a construction background and have completely gutted and remodeled my last home myself, so the maintenance and renovation aspect would be somewhat covered. I also used to have my real estate licence (Florida) and worked as a property manager, managing about 60 single family homes and condos. I'd like to do shorter term mortgages (no longer than 15 years) and future disposable income would go towards paying down the mortgages ASAP. I HATE debt.

This is definitely not something I am all in on, it's just something I'm considering looking into more if the mortgage aspect of it is possible. Sure I could buy a couple homes cash but I could buy several more if I do 20% down. However, I have no current income source, I am living off savings. I'm not sure what options, if any, are available to someone in my situation. I would like to know if I would qualify for a loan (or loans on up to x properties) based on my credit score, lack of debt and cash savings. Is this possible, or not without a current income source?

Bob Green · Answer

Eric,

Depending on the cash flow of property you may be able to purchase investment properties with 20% down payment using asset based lending.

Tarik Turner · Answer

Stated income loans would also work for you rates would be in the mid 6's to 7's depending but you aren't totally dead from receiving a loan.

Max LTV 75% to 80% It can at least get the door open

Caleb Jordan · Answer

@Eric P. Seller financing is a great idea, but that will only be a small pool of properties.

You could look into commercial lenders and see if they fit. Hard money lenders are another option. There are HML companies out there that can do longer term loans for rentals or can do a cash out refi on a rehab so you can put equity back to work. In both of these types of financing your personnel income is usually not a factor.

Account Closed · Answer

I would talk to a local lender as lots of times they will count 75% of the appraised rental rate as income. That may cover the property for you. They may still shoot you down, but sounds like you have enough cash to buy a few without lending and then cash out refinance at a later date.

Chris LumLee · Answer

Another spin you could put if you were looking at a conventional loan (or really any loan for that) is if what you're trying to buy outright costs less than what you have and any property you do have does generate income, that could be considered. It has for me when I've asked for loans and I wanted to show income on top of my W-2 income.

Exavier Hamilton · Answer

Your the perfect fit for Private Money, because you need a product that doesn't verify income or employment, with risk based rates.  Your credit score and the property your looking to buy are the main concern.  You can get up to 80% LTV funded fast.

Stephanie Medellin · Answer

@Mary Mitchell  I can't say for sure that there's not a lender out there that would be ok with that setup, but I know the lenders I work with will see who owns the LLC, and they want all leases to be arms length and market rent, so no renting to family either.

Greg Downey · Answer

@Eric P., Although standard commercial loans are mentioned here, I feel like they are being under represented.  A lot of the feedback is, if you don't have personal income, then you either seller-finance or go hard money. There is a LARGE market for private institutional money where you can get 30 yr fixed loans on 1-4 units. Commercial, investment loans are designed for guys like you. The income is based on the asset's income. I see your primary issues as: not owning your own residence and buying low value properties.

Mary M. · Answer

@Stephanie Irto question: if the property is held in an LLC or S corp what is the guidelines if the member rents the property paying market rent?

I know a couple folks that do this (not me tho my apts are too big for my needs :))

Mary M. · Answer

Commercial loans look to the property for income. So you could buy commercial multifamily (5+ units) as long as it has strong financials and is “seasoned” ie has stabilized rent history.

Fwiw i dont have a job either. And I can get financing based on the property i am looking at.

Find  a good commercial agent to help you

No job, 800 FICO, 200k cash... can I buy rentals w/ 20% down?

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