Cant get approved for house hack

[Pete Storseth]

So I'm trying to start my real estate portfolio with house hacking, refinancing, and cash out pays for the next down payment.

My credit is 711, and my debt is low, BUT I only make 23k a year. Ew.

So I go to banks today, a mortgage company and a private lending company.

Not good, but dont worry, I knew I didnt have money.

Banks told me my debt to income is too risky, and one told me about down payment assistance grants offered in Houston and Harris County. Pretty cool idea, I'll be looking into that.

Mortgage company was a joke. All bad reviews online, I didn't even mean to go there, just happened to walk by. This lady was super rude, pretty much laughed me out, but whatever.

Private lending company said they do not allow owner occupied, gotta pay 25% down standard, and worst if all no refinance option without a 5% prepayment fee. Okay, not sure how I can use them ever.

I still have appointments at my own bank, Chase. A credit union that has a few reviews on Yelp, all positive. And like I said, I am not bummed out at all, i knew i didnt have money.

Still, cant help but to wonder whether house hacking is gonna work for me. Partnering would point me to finding someone with the money to get started on a conventional loan, let me manage everything and split the profit, but then how will the refinance work, why even house hack that?

What about wrapping mortgages? It's just as hard to find multi-family in my market that cash flows with me in one unit, and I really dont see the risks. As long as the numbers work and everyone knows what's going on, why not?

Seller finance could work too, but I would house hack, I'd just make sure the rents exceed my payments, good luck...

Any house hackers, feel free to jump in and give some ideas for funding or finding a way to qualify for a fha, ready30, 203k, or home possible loan.

[Chris Mason]

Originally posted by @Pete Storseth:

So I'm trying to start my real estate portfolio with house hacking, refinancing, and cash out pays for the next down payment.

My credit is 711, and my debt is low, BUT I only make 23k a year. Ew.

So I go to banks today, a mortgage company and a private lending company.

Not good, but dont worry, I knew I didnt have money.

Banks told me my debt to income is too risky, and one told me about down payment assistance grants offered in Houston and Harris County. Pretty cool idea, I'll be looking into that.

Mortgage company was a joke. All bad reviews online, I didn't even mean to go there, just happened to walk by. This lady was super rude, pretty much laughed me out, but whatever.

Private lending company said they do not allow owner occupied, gotta pay 25% down standard, and worst if all no refinance option without a 5% prepayment fee. Okay, not sure how I can use them ever.

I still have appointments at my own bank, Chase. A credit union that has a few reviews on Yelp, all positive. And like I said, I am not bummed out at all, i knew i didnt have money.

Still, cant help but to wonder whether house hacking is gonna work for me. Partnering would point me to finding someone with the money to get started on a conventional loan, let me manage everything and split the profit, but then how will the refinance work, why even house hack that?

What about wrapping mortgages? It's just as hard to find multi-family in my market that cash flows with me in one unit, and I really dont see the risks. As long as the numbers work and everyone knows what's going on, why not?

Seller finance could work too, but I would house hack, I'd just make sure the rents exceed my payments, good luck...

Any house hackers, feel free to jump in and give some ideas for funding or finding a way to qualify for a fha, ready30, 203k, or home possible loan.

This is going to be a REALLY blunt "what you need to hear, not what you want to hear" type post. Please feel free not to read if that's not OK with you.

So. All the people on BP here in the Bay Area talking, podcasting, blogging, and posting, about how they went from pennies to riches just from real estate? That's mostly a lie. I've seen a lot of their tax returns, they're on BP, they see me, so I'm who they call for a mortgage.

Most of them STARTED by having decent incomes from decent day jobs. They leveraged that into the next income level, absolutely. But they STARTED by having decent incomes from their day jobs, THAT was the first boot-strap they pulled up on. It takes money to make money. 

Suppose you have 50 hours to devote to solving this. Here's where I'm about to be REALLY blunt, again please stop reading if you're not OK with that or are feeling sensitive today.

You can spend that 50 hours on the empty promise of "wholesaling" or "seller financing," or any number of other whimsical things, but the problem there is that so far you haven't been able to sell anyone on hiring you for more than minimum wage 40 hours a week, how are you going to sell a homeowner on selling to you for 60% of fair market value? That seems unlikely. The people that pull this type of stuff off are typically really good at sales and marketing, and no one that's good at sales or marketing is working for $23k/yr, since they could at a very basic level market themselves to employers, and sell them on paying a decent wage.

I strongly suggest you devote that 50 hours to getting your basic personal finance 101 house in order. What that looks like for you is unknowable based on being strangers on the internet. You need to crawl before you walk, and walk before you run. Perhaps you have a really valuable skill-set, but you aren't selling it, because you think sales is bad or something, I don't know. If that is the case, read this book on ethical 21st century value-based sales - this book or one like it might be able to address BOTH this and the previous paragraph. Or maybe there's something else going on, whatever it is, I strongly suggest getting your personal finance 101 house in order before trying to bark up the real estate tree.