How do FI passive investors (Syndication LP’s) get loans?

[Sean Barber]

As the title says, I’m trying to plan for the future and curious how this works. Ideally, if I’m invested in many different RE syndications that are using leverage (and doing cost segregation analyses), then my annual K-1’s will show a sizable loss even though I’m making money. If I convert my entire portfolio to passive investments in these syndications and no longer have a W-2 job but then want to buy a primary residence how could I get a loan? Wouldn’t the banks look at my taxes and say I don’t qualify because I don’t pay taxes and in their eyes don’t have any income?

[Randy Bloch]

This is a real concern and can be a challenge for obtaining a traditional mortgage product in the US with the best rates.  I have heard examples of people with 8 figure net worth being turned down.

1) if u have a larger Brokerage account u can get a asset backed loaned from like a Schwab or fidelity

2) go to small community bank credit union that will not sell the loan, they won’t be bound by the same underwriting guidelines of a traditional product. Rate might be a bit higher 

3) with mortgage rates approaching 6% it becomes more compelling to pay cash.

4) private money lender, but probably not attractive rates.

5) in a bad market, seller financing could me option

For private real estate investment I think u can buy with cash, collect the rent for 1-2 years and then refinance with portfolio lender.  They will lend based on properties financials and not your personal financial.  Actually, u probably can do that with the initial purchase.



Quote from @Sean Barber:

As the title says, I’m trying to plan for the future and curious how this works. Ideally, if I’m invested in many different RE syndications that are using leverage (and doing cost segregation analyses), then my annual K-1’s will show a sizable loss even though I’m making money. If I convert my entire portfolio to passive investments in these syndications and no longer have a W-2 job but then want to buy a primary residence how could I get a loan? Wouldn’t the banks look at my taxes and say I don’t qualify because I don’t pay taxes and in their eyes don’t have any income?