I want to buy, but I don’t have a job yet?

Question

Hello BP!

I am a big fan of the podcast, and now I have recently joined the app and forums! I am a 21 year old student in college who is about to get married in June. My future wife and I have only minimal jobs averaging about a combined $600 a month since we are in school, but we would really prefer to buy a house rather than rent. We don’t expect anything nice. I would love to do the BRRRR method except that I would live in it for a year until we have enough to move out, rent it, and refinance it. I will be a teacher starting in January of 2021 while she will be a nurse starting in June of this year. The problem is that we both live on our college campus right now as we wait to graduate, so we would have to start renting come June unless we can find a way to qualify for a loan. Renting for a year is not what we would like to do since we almost see it as throwing away money rather than investing it. My dad is willing to co-sign the loan because of our lack of income and credit history, but it does not seem that we can find anyone that will give us a loan despite his great credit score and income.

We have 12k saved up, and my wife will have a high-paying job come June. Our predicament is that we can’t find a lender who will trust that our future incomes are worthy of the loan. Any advice for how we could possibly get a loan without a steady income yet?

Joe Splitrock · Answer

@Trevor Bragg qualities worth learning in life are patience and planning. You are not even out of college and you are getting married. You are not even married and you want to buy a house. Getting started early is good, but rushing can cause you to make mistakes.

The reason they don't lend to people without income should be obvious. I wouldn't even rent a house to you and your wife, because I require income and job history.

I am not sure what market you are in, but in most places you can get a small apartment for $700-800 a month. I would plan to rent for 1-2 years. Spend all your time and energy getting established in your career. Then start shopping for a property. With income and employment history, you should easily qualify for a job. Over a couple years, you should be able to save up more money, so you can get a nicer property. I would look at getting a 2-4 plex, so you live in one and rent the others.

Write a budget, make a plan and execute a 5 year strategy. I would also caution you to make sure children are part of the plan. If you choose to have kids, they take lots of money and TIME. I am not saying to wait or not have kids, just be realistic about the impact. And be ready for the reality of "oops we didn't expect that". I am telling you this because at 21 you have no concept of how children change your life. It could easily derail any investing plans.

Good luck. Honestly you are doing great already with the money you have saved. Just be patient and do it right. This market is inflated already, so no reason to rush into it.

James G. · Answer

@Trevor Bragg If you find a deal that's good enough, you won't necessarily need a bank to make the initial purchase. Find a deal at 70% ARV, and then use a HML or a PML to make the purchase. In 6 months, once your wife has a better paying job, refinance into a conventional loan. If done correctly, you can purchase this property with little to no money down. Hope this helps; reach out if you have any questions.

Caleb Heimsoth · Answer

@Trevor Bragg both get steady jobs, then get a loan.  Get married first too.  Don’t jump the gun and try to do to much all at once

Bryan Garrido-Garcia · Answer

@Mark Durham Hi Mark. Do you have any specific resources that you'd recommend as a starting point to learn about the strategies/techniques? Thanks!

Theresa Harris · Answer

@Trevor Bragg  I'd keep saving and wait until your soon to be wife gets a job.  You mention even if you get your dad to co-sign, they won't lend you money-why?  If his credit is good and he doesn't have debt, he should be able to go in on the house with you.  While $12K is great savings for a student, is it enough for a down payment and closing costs in your area?  $600 a month from your jobs, won't go that far.

Andrew Postell · Answer

@Trevor Bragg when we are talking about buying a PRIMARY home then some very specific federal compliance laws come into place which limit what you can do comparatively to an investment property.  For example, a hard money loan can be used to buy an investment property....but not a primary home.

Likewise, when we focus on buying an investment property maybe a home in a certain neighborhood...or a certain distance away...is fine.  After all, we won't be living in it.  But when buying my PRIMARY home...I expect it to have certain things or I'm not buying it.

It even sounds like you may only have 6 months to wait for a traditional loan anyway.  And once the fiance has an offer letter, that new job income can be used, in conjunction with your income, to help you get a traditional loan.  And to further expand on that, you can even qualify for a "first time homebuyer" program as well.  I would suggest to continue to plan and save and make that purchase using a traditional loan in a few months.

Mark Durham · Answer

It's possible to buy RE without a going to a bank.

Learn creative financing strategies/techniques (esp. Seller Financing, Lease Options & Sub2) then focus on finding MOTIVATED sellers.