All Forum Posts by: Brian Garrett

With most rental property price points - and since you have good credit, money in the bank, and no debt - you could qualify for a mortgage with a decent part time job at Lowe's or Home Depot -- W-2 income will carry a ton of the weight you are struggling so hard to lift and make financing the property pretty painless... Once you are an established investor, with multiple properties showing income, it still isn't easy to qualify for conventional mortgages as a self employed borrower -- Lenders LOVE to see the W-2 --

Remember when you played Monopoly as a kid - "Passing Go" was the key to getting started - Later you were making so much money from rental income that you didn't need to Pass Go (collect a salary). Real life investing is exactly the same.

Good Luck

Well said Jeff and that all makes perfect sense. I'm just not planning on getting a W-2 job anytime soon (hopefully ever) so that's where the problem lies. I'm focusing all of my efforts and time into REI now so this will be my new "full-time job" which means I've got to find a workaround and solution since I'll technically still be "self employed" moving forwards even with my REI aspirations.

2 Votes

Originally posted by @Bryan O.:

@Brian Garrett @Steve Vaughan brought up a good point regarding timelines. Many of the lenders I have spoken with require 12 months "seasoning" of the loan. Some do not. If you do less than 6 months, you may well find you've shot yourself in the foot because the appraiser may use the house you are refinancing as a comp!

Using a credit partner allows you to get a deal you couldn't otherwise. This begins your track record and starts putting income on paper. If you've spent the past number of years getting rid of (or hiding) your income streams, what do you expect? When you talk to the bank, offer to put a load of cash into escrow with them as security for the loan... I turn down tenants in a C+ neighborhood that have plenty of cash. Why? Because cash can get spent instantly. Without a source to replenish it, they don't even get to rent my $1k/month unit.

FHA will require your income the same as all of the conventional mortgages will.

Best of luck.

Great information Bryan thank you for this. I was under the impression from my research on the BRRRR strategy that the seasoning period was typically 6 months as it seems that's when I'm seeing most people cash out refinancing to move onto the next deal. I'm assuming the seasoning period is different with every lender and not just a standard time? I already park a decent amount of cash with my bank (which I'm planning to invest in real estate) so maybe they'll make an exception. Worst case at least I know there ARE options and I'm not completely stuck in the mud.

0 Votes

Originally posted by @Jay Hinrichs:

@Brian Garrett Try:

Lima One

Try: lendingone

Try : Lendinghome

Try ; Cogo capital

Try: Peak

I know Peak has a non recourse product at 50 to 60% LTV with 8 to 10 points and 8 to 9% interest

I feel what your going through I was in the same boat from 2009 to 2011 when we had to disgourge a bunch of real estate and my tax returns were deep in the red.. I could not get even a owner occ loan at 25% LTV..

you must have tax returns to get conventional or low rates. Now I was still able to keep my commercial credit but that was ONLY because of a 2 decade plus relationship with one particular bank that went to bat for me.. but I was on a VERY short leash.. but it was worth it now that we have bounced back deep into the black I am back to being the largest or ( one of ) largest borrowers at that bank and I finally got a 50% LTV owner occ loan on my home in Lake Oswego.

Thank you for the suggestions Jay. Let me ask you this since you brought up the point of having a lengthy relationship with your bank. I've also had a long and great relationship with my bank as well and I have a decent amount of cash parked with them and have a credit card through them with zero debt. Any chance they would make an exception for conventional? Obviously I plan on asking them but I'm just curious if there's any chance of that scenario or if it's just a long shot pipe dream.

0 Votes

Originally posted by @Steve Vaughan:

I was following along happily here until @Ivory Hayes idea of finding seller financing was dismissed completely and you can't wait 12 little months to refi. 12 months in the long game or real estate is a blip.

If you are buying a commercial asset like a 5+ unit apt building, the financials of the asset will count more heavily towards qualifying. It will rely less so on you and your income and credit score.

But a commercial asset isn't geared well toward BRRRR, so best bet since you have savings for DPs may be seller financing. Find a tired plex landlord. Good luck @Brian Garrett

Thank you Steve for your feedback and input. I didn't dismiss the seller financing option I just know those deals will be more far and few between so it's not a great overall strategy especially long term. If I find those deals, phenomenal, but if not I need to be able to still secure lending. Would I be able to get FHA if I was willing to live in the house for 12 months? Or would I still not qualify for that either due to no proof of income? I don't need FHA 3.5% down since I have cash for down payments but if that route might work it could be one to consider. As far as commercial real estate that's surely something I will have interest in down the road but not until I'm far more knowledgeable and experienced. I don't want to get in over my head on any deals early on.

0 Votes

Originally posted by @Bryan O.:

@Brian Garrett almost every loan to your LLC will require you to personally guarantee the loan. That means they want to see your income to ensure that if you shut the LLC down they can still get paid. You are right that it does not show up on your credit, but they will show up as an inquiry to check it, plus you provide your income information. You may be able to call around and see about a line of credit with your other property(ies) as collateral. That assumes you have good equity in them.

What you want to look into is non-recourse lending. These types of loans are harder to find, usually require 50%-60% down, usually higher interest rates, etc. You can try to find HML or Private money, but they're going to be quite expensive.

Another option is to find a credit partner. This is a person banks "like". They will have high W-2 income and good credit. They can take the loan and you give them something in return for their credit, whether it is equity or some other payment arrangement would be up to you to work out with them. This is probably your best bet with the banks, but requires additional thought on your part to figure out what works.

Thank you for the response. The only problem with finding a credit partner is that it still doesn't help me ever get my own lending. I don't want to have to use a credit partner on every deal. I have cash, I have a great credit score and I have ZERO debt. Surely there's got to be somewhere I can qualify for a mortgage with. For my flip deals I'll just use cash since it's a quicker turnaround on the money and cuts back the holding costs anyways but for BRRRR deals I need to have lending.

0 Votes

Originally posted by @Avi Garg:

@Brian Garrett your issue of refinancing the property is taken care of. Other idea is to call every bank/credit union within 100 miles and ask if they would do the loan.

Stop complaining? I was unaware that asking questions to gain knowledge through due diligence is called complaining these days. No my issue is not taken care of whatsoever hence the reason I'm trying to find a solution and get advice on the best way to proceed.

Update: I see you've edited your post and removed the unnecessary remarks. Thank you.

4 Votes

Originally posted by @Dwayne Byrd:

Also something to be careful of if buying a home in personal name and simply switching it an LLC is the Due on Sales Clause in your original mortgage. If you go that route, there is a chance that the bank has the option to call the loan due at that moment. Do they always do this, no, but COULD they if interest rates start to rise a lot, Yes. Just something to look for.

I remember reading this in a different thread and it's good information. Unfortunately with my particular situation getting lending to begin with is more so my problem.

0 Votes

Originally posted by @Kyle R.:

Yes. Last two years of tax returns, credit check, pay stub, etc.

See that eliminates that option for me. Do you have any other advice or suggestions?

0 Votes

Originally posted by @Ritch Bonisa:

There have been some good comments on this one. It IS all about finding the right people. In my experience it's important to have people that will tell you "NO, don't do this one." I hope that makes sense. There are always local people who are closer to the fire that can tell you NO. Find them if you can.

Thanks Ritch the main problem I'm experiencing right now at least for the BRRRR strategy is obtaining a loan without proof of income. Any suggestions? I have everything else (cash, credit score, zero debt) but I have no proof of income. Obviously for the BRRRR to work I need to get lending in order to cash out refinance to roll that money over into the next property.

0 Votes

Originally posted by @Derek Carroll:

@Brian Garrett depends what the deal is and who the lender is and what your overall picture is.

The deals I work on and lenders I deal with almost always REQUIRE a Brand new single purpose LLC.

I wouldn't do anything with the legal entities until after you talk with a banker because they will help you coordinate that as part of the closing process.

I understand that but what I'm trying to figure out is if there is even a WAY for me to utilize the BRRRR strategy and obtain a loan to begin with and be able to cash out refinance in order to roll that money into the next property and keep building my portfolio WITHOUT having to show proof of income. I have everything else (Cash, Credit Score, Zero Debt) but I have no income for the past couple of years.

0 Votes

All Forum Posts by: Brian Garrett

Brian Garrett has started 69 posts and replied 2926 times.

Post: BRRRR without proof of income?

Post: LLC and Commercial Loan?

Post: Can't show income so what are my loan options?

Post: LLC and Commercial Loan?

Post: LLC and Commercial Loan?

Post: BRRRR without proof of income?

Post: LLC and Commercial Loan?

Post: LLC and Commercial Loan?

Post: Preparing for my first flip!

Post: Personal Guarantees on Mortgage but Property in an LLC?