Lending vs Income Doc Scenario with BRRRR Method

[Zack Thiesen]

I am a little skiddish about posting what might be a stupid question.. I am currently closing on my first rental that I bought here in California three years ago and if all goes well I should be up $120k sooner than later. I will be leaving for another state after that to pursue investing more seriously and hopefully, full time.

My question is about income documentation for the cash out refi's that I will encounter, because I sure as heck won't do all this only to arrive there and discover that I was dreaming. I am a carpenter by trade and enjoyed living essentially free in one of the units of the building I own. As such, there were several months and periods of time that I did not have income, just money saved, and went to help out my family down south. 

Long story short... (And this would be in a region/market with an avg home price of $75k and avg per capita income of about $17k) If I purchase a property in good condition outright for around $50k, and then finance another with money down and use the house I bought as collateral, is that a viable plan in any reality? I will be moving there to work on the homes myself and with others I hire and won't be employed in another way. I will perhaps be there for 6 months or so for the entire process from property search to employing a PM company. Then I will head back to California to work for a while and come back the next year to cash-out refi and do it again.

I apologize if it sounds like a foolish scenario.. I just imagine banks won't like breaks in employment and irregularities like that. I have read about things like no-doc loans, using assets as collateral for loans etc. and am just curious how that would work in a BRRRR'ing strategy or if you would hit a wall somewhere.

No-doc seems a little unbelievable, hard to imagine they still exist.. do they? My experience the first time around in real estate was that I really had to ask around... A LOT. And I learned a lot. I will never forget the first lender I went to they said no way. Many, many phone calls, meetings and inquiries later I went through the process without a hitch with a loan officer at a Wells Fargo branch that is 6 hours from where I live. So I figured I would ask around for advice in this next step in my investing journey too.

Thanks

, Zack