I can't pull my money out of my rehab

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I can't pull my money out of my rehab

Jonathan Stastny
Omaha, NE · Member since 2017 · 16 posts · 3 votes

I have a unique(I think) situation that I could really use some advice on. I currently own two properties(one duplex and one single family.) I've got an FHA loan and am house hacking the duplex. The single family, I have rented for $1625/mo and own it free and clear. I spent about $45k on the rehab and it should appraise between $160-165k.

The problem I have is that before leaving my job, I was working with someone at a bank that told me it would be no problem getting an LOC or mortgage with my stated income from my rentals and Air BNB(about $50k/yr.) Plus I picked up a job bartending nights where I make another 30k. However, when it came time to apply for the loan, I was denied because they won't count any of that income for 24 months. I couldn't even get a 60% LTV against the house that I own free and clear.

My dilemma is that I would like to purchase more properties using the BRRR strategy, but not sure where to go from here other than to wait until I can show 24 months of consistent income. Does anyone have any suggestions that might help me move forward sooner? I'm not super interested in flipping, I'd rather build a portfolio for long term wealth.

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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
7y

@Jonathan Stastny never go back to that bank ever again.  That experience was totally forseable and it's that's type of guidance that makes everybody hate working with lenders.  Super frustrating that this occured to you and I'm not even involved!

But as suggested above the course of action here is to seek a different lender.  I would suggest posting in the Nebraska forum to see if any local people have some recommendations for you.  You can also try some local real estate groups that meet in the Omaha area.  Bigger Pockets should have some listings for some groups and maybe try meetup.com as well.  

Hope this helps!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    try a local credit union or small commerical bank.. who will give you portfolio loans.

    and their charter is to lend in the community.. you wont get absolute best rates but you can get through the 

    income part of it.. as long as your credit is decent which i assume it is when you have the smarts to do what you have done and own a property free and clear ( congrats by the way)... better to be in your position than leveraged to your eye balls with no true equity.

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  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Jonathan Stastny:

    I have a unique(I think) situation that I could really use some advice on. I currently own two properties(one duplex and one single family.) I've got an FHA loan and am house hacking the duplex. The single family, I have rented for $1625/mo and own it free and clear. I spent about $45k on the rehab and it should appraise between $160-165k.

    The problem I have is that before leaving my job, I was working with someone at a bank that told me it would be no problem getting an LOC or mortgage with my stated income from my rentals and Air BNB(about $50k/yr.) Plus I picked up a job bartending nights where I make another 30k. However, when it came time to apply for the loan, I was denied because they won't count any of that income for 24 months. I couldn't even get a 60% LTV against the house that I own free and clear.

    My dilemma is that I would like to purchase more properties using the BRRR strategy, but not sure where to go from here other than to wait until I can show 24 months of consistent income. Does anyone have any suggestions that might help me move forward sooner? I'm not super interested in flipping, I'd rather build a portfolio for long term wealth.

    You need a better lender. 

    Mine has two different options he can qualify you for in less than 24 months based on bank deposits. 

    1 is specifically for REI, 1 is more for self employed people.

    Talk to a few different lenders, ask who other investors in your area are using.

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  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    7y

    @Jonathan Stastny never go back to that bank ever again.  That experience was totally forseable and it's that's type of guidance that makes everybody hate working with lenders.  Super frustrating that this occured to you and I'm not even involved!

    But as suggested above the course of action here is to seek a different lender.  I would suggest posting in the Nebraska forum to see if any local people have some recommendations for you.  You can also try some local real estate groups that meet in the Omaha area.  Bigger Pockets should have some listings for some groups and maybe try meetup.com as well.  

    Hope this helps!

    2Reply
  • Scott Bergmann
    Real Estate Agent · Omaha, NE · Member since 2018 · 42 posts · 26 votes
    7y

    @Jonathan Stastny Dundee bank is a great one, shoot me a message I know of a few in the Omaha area that are investor friendly.

    0Reply
  • Matthew WatsonPro Member
    Rental Property Investor · Omaha, NE · Member since 2016 · 57 posts · 101 votes
    7y

    You should talk to some commercial lenders. I would personally suggest Ron Baumert at Core Bank.  Dundee bank is also great to work with

    1Reply
  • Jonathan Stastny
    OP
    Omaha, NE · Member since 2017 · 16 posts · 3 votes
    7y

    @Scott Bergmann Dundee Bank is who I was working with, because I had heard great things. However my friend didn't have a great experience with them either.

    0Reply
  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    7y

    There are 2 types of loans that you should consider. A bank statement loan. This loan uses bank statements to derive your income. Typically its self employed, but not always.

    Next would be an investor cash flow type loan. On this loan, you don't put any employment or income on the application but the only debt ratio is if the property rents for enough to cover the PITI payment or more. If so, you good to go on debt ratio.

    I would concentrate on these types of loans until the 24 months is up and you can qualify for conventional loans. Typically you will only find these loans with Brokers or Bankers. You wont find them at banks or credit unions. I would locate your nearest real estate investment meeting, attend and ask others there, who they use for loans of this type. You should get some answers that way. If not, call the local title companies and tell them the type of loan your looking for and see if they can recommend a lender. They know all the lenders, because they close the loans for them?

    I hope this helps?

    0Reply
  • Shelby Ek
    Real Estate Agent · Allentown, PA · Member since 2016 · 70 posts · 86 votes
    7y

    I was able to get a LOC on a property I purchased just a few months earlier. I made sure to give my lender my new leases so they could use that income to qualify me. My taxes did not yet have that income accounted for.

    Like others have said try a different lender.  Ask them right away if they will be willing to use that rental income to qualify you.

    0Reply
  • Justin Kane
    Specialist · San Antonio, TX · Member since 2015 · 909 posts · 297 votes
    7y

    yea its simple.. go lender shopping

    0Reply
  • Jonathan Stastny
    OP
    Omaha, NE · Member since 2017 · 16 posts · 3 votes
    7y

    Thanks for the input everyone. I have called 8 different lenders and haven't gotten anywhere, but I will continue to try.

    0Reply
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