All Forum Posts by: Brian Garrett

Go to small local banks and start building a relationship, for me as long as my property is cash flowing I can typically get a refi.

Brian, what bank is your current funds being held in. Try using them first. They see a pattern of deposit and withdrawals they may be inclined to do it.

I also suggest setting up an LLC and haw funds funneled through there. It's always good to start with a smaller community bank, there lending requirements are a little more loose. I haven't done it myself yet but I've heard where lending institutions will finance you based on the income production of the property along with your credit score and down payment. This maybe an option for you however they normally will not do it on SFR you will need to purchase a plex of some sort

You need to start looking for non bank lenders. Credit unions and banks are not going to fit your situation. Hard money that only want to consider the deal, the money will be more expensive and you may need to keep a higher LTV, but you can find the money. Google hard money / private money and just start calling. The programs change almost daily.

I purchased my first property with cash. Second property was 25% down with a conventional mortgage using my W-2 income. Third property we did a refi on first property pulling out enough money to pay cash. I then formed an LLC and went commercial. As long as I bring 20% to closing my banker doesn't care how many I purchase from this point on. We just closed on #6 and are looking for more deals. I have moved all properties into the LLC and have 75% LTV mortgages on all 6 properties. This left us with enough cash for the next four properties at 20% down.

@Brian Garrett, if your partner's income or incomes are high enough, it will compensate for your lack of income and they will lend to your LLC! No doubt!

Brian Garrett maybe find someone with the W-2 income to consign for you?

HI Brian,

The below is with regards to conventional financing for BRRR not portfolio money, private money, or hard money.

I've done files for RE investors with purely real estate rental income so in your hypothetical if you had zero other debt (car, credit cards, student loans, no nothing or all $0.00 balance) then you could qualify for a cash out or regular rate/term refinance "if," the net rental income on your hypothetical rental (75% of gross rents since this is a recent purchase of a BRRR strategy) exceeds the PITIA ( principal/interest/taxes/insurance/assessments) of your property.

So in essence, if your BRRR property "cash flows," with respect to how fannie mae or freddie mac calculates your income and you have no other obligations or housing expenses (AKA you live at home with mom and dad) then yes its possible to qualify with no regular W2 income or self employment income.

Rental income is the fastest income to use with out seasoning or history of it being received. All you need is a rental lease agreement signed and dated + copy of a security deposit and you can use 75% of it - PITIA right away.

All other income types require extended periods of time to use in a conventional financing scenario such as:

- note or interest income or dividends from stocks - receipt for min of 2 years as shown on tax returns + 3 years of continuance on the note and stocks are assumed to provide income into the future

- self employment income - min 1 years of history and 2 years in the same industry with no significant gaps of employment

- W2 income or salary - min 2 years working in the industry or higher education(college) in a related field with no significant gaps of employment and min 1 paystub to use income to qualify

- Bonus income at W2 job - min 2 years of receipt (off chance to use 1-2 years of receipt)

- over time income at W2 job - mins 2 years of receipt (off chance to use 1-2 years of receipt)

- contractual income like sandwich leases, land contracts, is similar to the note or interest income above

- royalties  use for qualification is like contractual income - min receipt on tax returns for 2 + years to average for use to qualify

- alimony is min 6 months of receipt to use the income as a reliable income source for qualification purposes

- child support income 6 months of receipt plus min 3 years of continuance or 36 months left till the child is 18 years of age or you cannot use it

- automobile allowance from employer W2 - needs to have been received for 2 + years to use

- many other types of income.

Hi @Brian Garrett: In response to your question:

1)  Sure. Last month I bought a 4 bed 2 bath for $100 down "Subject To" the existing loan. It was NOT a foreclosure, all payments were current. Basically, I took over the loan and payments. I sold it on a Wrap for $25,000 down and a higher monthly payment giving me a positive cash flow of $750 a month in addition to the $25,000 I received. (Not including the equity I'll get at payoff). I spent $500 and 30 days getting the placed cleaned up while I looked for a buyer. I made one month's mortgage payment. In this  case I actually SOLD the property so I don't have a "Tenant", I have a "Tenant Buyer". 

I did another, better one, simultaneously with one of my partners that I am training. We will net about $40,000 after expenses on an $8,000 investment. (Not including the equity I'll get at payoff)

2) A couple of months ago I got a Seller to Lease Option to me a totally paid off property for $100 down and payments of $850 a month. I did a Sandwich Lease Option to my Tenant who has the Option to buy, where I got $10,000 down and $1250 a month for positive cash flow of $450 a month. (Not including the equity I'll get at payoff). This is more of a rental (Rent to Own / Lease Option).

Either of these two can be repeated over and over. I've been doing Subject To's for twenty years. I've also done them as flips, but these are faster, and more profitable, less risky and less hassle.

Since BP doesn't allow me to put my email address here you'd need to PM me for more info, which I'd be happy to give. Most people don't want to wade through details as they read the thread.

Ken

Brian Garrett couple other things to try that I have not seen mentioned yet (or perhaps I missed them):

- Get a partner with a job and good credit who can do the refinance. You provide the initial capital for the purchase and finance and they refinance
- Depending on the cash you have at hand, some brokerages like Merrill Lynch allow you to borrow against it at a nominal rate. This can at least help you get started but not "tie up" your cash. Not exactly completely liquid either.

@Brian Stewart  check with Peak lending in KC they have this product a lot of people try to resell their product .. so you can go straight to the source if you wish