All Forum Posts by: Connor Mckelvey

@Tommy Cangelosi This is some good advice! The house is already appraised for $80k. The lender I am using is a local to the area I'm investing in, but I'm sure it isn't in-house with all these stipulations. Hope it's not too late, but it's worth a look.

@Richard Patrie, This is definitely something I could do. I have plenty of credit available. The big question I have is-- would the lender accept this? 

@Mindy Jensen Thanks! Totally get that. I found that being honest and transparent is the best way to do any kind of business. Lying is a slippery slope to fraud. Not going down that path...

@Harjeet Bhatti, OK! Borrowing against the 401K is interesting. My lender did say the remaining funds could not be a gift or borrowed. Is a 401K loan out of the picture then or is there something I'm missing?

@Jay Hinrichs You're not wrong! And this is solid advice.

I am undercapitalized. But I'm willing to take the risk for a good off-market deal. I'm young, single, have no debt and a high tolerance for risk. I have a solid job with an income that lets me stash away about $3,000 a month and saved up for this deal in just under 4 months. I really just want to get this first one under my belt!

@Jerry Padilla Great Feedback! Thanks for clearing up my question about gift funds on investment properties. 

I have exhausted all of my assets to get this downpayment and 6 months of reserves and don't have any other assets :(

Sounds like we might need to both get on the loan for this to work out. Or get really creative really fast.

@Tchaka Owen Thanks for the reply!

I have never heard of a gift letter before so I did a little research and it looks like gift funds cannot be used toward the down payment on an investment property. Does that sound right to you?

@Harjeet Bhatti Thanks for the reply!

I do have a 401k with about $4,500 in it. However, I am using this account for my proof of 6 months reserves. The mortgage, taxes and insurance work about to be about $500/mo. So, $500 * 6 = $3000. With the fees associated with withdrawal from my 401K I don't think it would work out. 

Would you mind going into a bit more detail as to why they won't accept those funds? 

My brother came to me with this deal and the $12,000/$3,000 split has been our agreement from the get-go. I get that the lender doesn't want me funding a down payment with a gift, dirty money, or another loan/cash advance. But two investors putting funds together? Seems like this would be a very common occurrence.

Hi BP! 

My Name is Connor (long time lurker, first-time poster) and I'm just about to close on my first Investment property!

I'm in a very frustrating situation with my lender and this noobie could really use some advice! The situation is a little convoluted, so if you keep reading... Thanks! Any and all advise is greatly appreciated!

Background:

My brother and I are partnering on our first rental property, a townhome we are buying for $70,000 with 20% down ($15,000). Per our arrangement, I was to bring $12,000 and my brother was to bring $3,000, totaling $15,000-- the 20% down payment for the loan. 

I will be the only official borrower on the loan since my credit rating is nearly perfect, but my brother and I will both be on the deed for the property, 50%-50%. The seller is paying $1,400 of our closing costs and we are picking up the remaining ~$2,800, bringing the cost to close to roughly $17,800. 

Problem:

I have just over $19,500 in my savings account ready for this deal, but I got an email from the Mortgage Banker today stating that of that $19,500, only about $16,500 could be verified. The $3,000 they could not verify was the $3,000 that my brother transferred to me over 2 weeks ago, leaving us about $1,800 short. I asked why the $3,000 could not be verified to which I received the reply.

I explained that the $3,000 was neither a gift nor borrowed, but a part of a business partnership between my brother and myself. She is going to check with the underwriter tomorrow and see what can be done. Until then I'm trying to get creative in order to not lose or delay this deal!

The real frustrating part is that they have had my bank statements for weeks, and this is just coming up 8 days before we are supposed to close. If they would have brought this up earlier, I would have delayed paying my $2000+ in income taxes until after close and this wouldn't even be happening.

Questions:

1. Has anyone ever partnered on a property with someone where only 1 person was the actual borrower, but both were bringing money to the table? Did you have trouble like this when consolidating funds?

2. Has anyone ever had business transaction miscategorized as "gifts" by a lender, were you able to prove it wasn't a gift or some other private loan? 

3. Has anyone heard of this 30-60 "seasoning period?" Is this a Fannie/Freddie stipulation or something?

4. Relative to your lending experiences, is typical? Am I rightfully frustrated? Would you ditch this lender?

Glad to finally join the community!

-Connor