Who wants to finance me?

Question

I own my house outright. My credit score is around 800. Never been late in a payment. Always paid in full. Over $100,000 in the bank. But, but, BUT: no W-2s and no employment. Because of this I have been struggling for years to get financing. It infuriates me because if only I could get a conventional loan like everybody else, I would be rich by now.

The recent negative trend of central bank interest rates just reminded me about how cheap financing is to everybody else (who aren't half as responsible with their money or debt as I am) and how financing would change my investment life... so I started screening the internet one more time trying to find something. And I am here to ask you this question:

Is there any hope? Who would finance someone like me, and what interest rate can I expect? What should I try? I might want to add that I can prove some monthly income (but not with a W-2, probably with just common sense, affidavits, or bank account activity).

Thank you all for your suggestions and help.

Bryan O. · Answer

Start talking with the commercial lending departments. They are able to fund deals (even residential purchases) based on the deals rather than your own personal finances. They have much greater flexibility. Even with "no income", they may be able to simply collateralize your paid off property, or collect a larger down payment. Then you build your business credit. You won't get the awesome 30-year fixed, but you can still find some good products.

I just financed a SFR property in my LLC at 4.5% interest, 5/20, no prepayment penalty. I did have to provide a personal guarantee in case of default, but that is pretty standard.

And quit selling drugs  ;)  Seriously though, if you have income and it isn't on your tax returns, then banks will naturally suspect something shady going on.

Bryan O. · Answer

@Todd Fithianmakes a great point @Damien Kirrmann. You can always look for a "credit partner" for deals. You bring the money, they bring the great W-2 income and credit (the stuff that makes banks happy) to the deal. You lose part of the deal to them, but it's better than nothing. I nearly went in as a credit partner on a 4-unit but was unable to because of the timeline (I was buying something else and didn't want the impact to my credit). It's a great method in the right scenario.

If you want to keep all the income from the deal, I'd ask around the SD IRA folks and find out who their non-recourse lenders are. They will want more money down (I think 40% is average), but they are willing to loan on stuff that it 100% based on the deal itself. I would expect they can find a product that can work for you.

Damien Kirrmann · Answer

Thanks guys! The bank statement programs seems to be what I need. However I am having real trouble finding real and honest ones in Florida. Most of the legit ones I could find where in California (and not licensed in Florida). Everything I found so far in Florida is very unprofessional, lacks transparency and feels very much like a scam. So if anyone has a recommendation for lenders licensed in Florida doing bank statement programs (to individuals, not businesses) that would help.

Bill Hamilton · Answer

p.s. the bank statement or asset depletion programs don't always require a business so they might be able to help you now.

Bill Hamilton · Answer

You can probably average your income from investments over the last 2-3 years and use that as income. There are also bank statement programs that will take your total income over 3 to 24 months and average that out. Start an LLC or DBA, open a bank account in that name and start running income through it (talk to a CPA first about any tax implications). It won't help you this second but could down the road. If the income from investments is sufficient (and not declining) then you can probably qualify for a conventional mortgage through Fannie or Freddie. If you go bank statements or asset depletion based on a non Fannie/Freddie, rates will probably start in the 6% range and go up from there depending on LTV, loan amount etc., etc.

Damien Kirrmann · Answer

Thanks Bryan for your answer. I was under the impression that commercial lending requires you to have a business in activity for a certain time. I don't have a business, my only income in the past few years has been coming from investments  - no drug selling :)

But if you think it could work, which lenders would you suggest I try? Where did you get your loan?

Who wants to finance me?

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