struggling to get a mortgage

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smoothnobody
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struggling to get a mortgage

Post by smoothnobody »

i want to get in to real estate. i have assets good credit and no debt, but no w2 or 1099. my 2018 tax return was six figures. my 2019 was just 15K from dividends and interest. the banks aren't liking my no employment and inconsistent cash flow. i've looked in to hard money, but the rates from these guys is 7-9% instead of the 2-3% for a traditional mortgage. they also focus on investment properties and right now i'm trying to get primary residence. my current primary residence is paid in full, completely renovated, and ready to start bringing in rental income. but i have to find a new primary residence for myself first. home equity loans looks much easier to get, but the rate is still 6-7% and i can't get enough to pay for the next property. my buddy has a construction company and can put me on payroll, but he can only give me so much work, so my w2 income will look more like a low income part time employee. he can over pay me, but he has to pay workers comp paypall insurance etc so whatever he gives me costs him 30%. another idea thats come up is start my own LLC and pay myself. this sounds interesting, but don't really know much about how this would work. my first thought was thats basically double taxation cause the business has to pay tax on income then i have to pay personal income tax on the money the business gives me. this business would technically have no income at this point, it would just be me putting my personal funds in to the business account so the business can turn around and give it back to me through payroll. another thing that's come up is a margin account through vanguard. i'm already approved for this but again the rates are 7-8% and if a margin call comes through i'm in trouble. i know i have options, but my best path forward is being friends with the banks and getting a traditional mortgage. and if thats going to happen i have to make my 2020 tax return look good. hoping somebody here has been down this road before and can teach a young man a few tricks.
ensign_lee
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Re: struggling to get a mortgage

Post by ensign_lee »

So what is your actual source of income at the moment?

That seems to be the crux that the banks are stuck on in loaning you money.
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Nate79
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Re: struggling to get a mortgage

Post by Nate79 »

If you have "assets" then pay cash. No need for a loan.

Do you actually have any real income?
adamthesmythe
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Re: struggling to get a mortgage

Post by adamthesmythe »

Banks make (and then resell, of course) mortgage loans to borrowers highly likely to repay the loan. The default way to prove that you can repay the loan is a few years of stable employment. Banks are now more than usually concerned about repayment.

I don't see a good alternative beyond...getting a regular job for a couple of years.
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Tamarind
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Re: struggling to get a mortgage

Post by Tamarind »

You need income to get a mortgage. No one is going to lend to you so you can cover living expenses while you bootstrap a rental business from scratch, you have to provide the initial capital from your assets or employment.

Do not take a margin loan. Do not try to manufacture fake business income from your assets. The bank underwriters, not to mention the IRS, will see through you in a hot second

Can you work for your buddy or start your own business actually performing services people will pay for? If so, and you make enough to pay rent on a room for yourself, then you can move out and rent out your paid off house for income.

You're going to need a job to prime the pump unless you want to sell your investments to pay cash.
Scooter57
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Re: struggling to get a mortgage

Post by Scooter57 »

If you are self employed the banks always require proof of many years' consistent earnings before granting a mortgage. It doesn't matter how much you make until you have a long history. It is annoying, as people with W-2 jobs get fired all the time and walk away from their homes, but that is how the system works.

Often the only solution is to get someone with a steady job to cosign, usually a parent, but this puts them on the hook if you screw up. With such fluctuating income it might not be prudent to take out a mortgage now, no matter what your dreams might be.
av111
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Re: struggling to get a mortgage

Post by av111 »

OP

You have a paid off house and some assets that bring in 15k one year and 100k another year. How do you pay living expenses? Property taxes etc from 15k

You are trying to rent out your primary home and buy a rental property but you have no reliable income sources

FWIW If you rent out the primary home and move into a small apartment for two years, you may be able to show regular rental income and then get a mortgage on your home.
AV111
grettman
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Re: struggling to get a mortgage

Post by grettman »

This sounds very risky... yikes!

The idea alone is frightening!

Gotta do this the right way. Need Income and capital...
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

Nate79 wrote: Fri Jul 24, 2020 4:05 pm If you have "assets" then pay cash. No need for a loan.
Do you actually have any real income?
i paid cash the first time. it's not a good use of my money. it grows faster in the stock market than it does in property appreciation. i want to spend the banks money. i want to play the game.

i've been living off my assets. my only income is dividends interest and long term capital gains.
adamthesmythe wrote: Fri Jul 24, 2020 4:16 pm Banks make (and then resell, of course) mortgage loans to borrowers highly likely to repay the loan.
this is the most common method, but there are "portfolio lenders" who hold the loan in house. they are more flexible cause they don't have to follow fannie may guidelines, but they do use them as a reference. it sounds like a have a shot with them cause they can go by asset depletion but the rates are still double a normal mortgage.
Tamarind wrote: Fri Jul 24, 2020 4:37 pm No one is going to lend to you so you can cover living expenses while you bootstrap a rental business from scratch, you have to provide the initial capital from your assets or employment.

Can you work for your buddy or start your own business actually performing services people will pay for? If so, and you make enough to pay rent on a room for yourself, then you can move out and rent out your paid off house for income.
i don't need money to cover my living expenses. my assets cover my living expenses passively. i have the capital needed to get the ball rolling, i just really really want a mortgage. i can't pay cash forever.

i can work for my buddy, but that income won't be enough to rely on. i need to get something else going. if i start a business, between the business income, the income working for my buddy, and the income my investments spit out, i can probably swing it cause everything else about me looks good to the bank. but i only have 5 months left of this year to start showing cash flow for my 2020 tax return and i'm not sure how to finesse this yet.
Last edited by smoothnobody on Fri Jul 24, 2020 6:27 pm, edited 2 times in total.
Triple digit golfer
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Re: struggling to get a mortgage

Post by Triple digit golfer »

So you have enough assets to afford living expenses, can easily cash for a house, but want a mortgage because it's cheap money?
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

yep, i want to play the game. debt isn't bad. it's the debt to income ratio that matters. with 200K i would pay in cash for 1 property bringing in $1500 a month i can do down payments on 4 properties with a mortgage, renovate, get $6000 a month rental cash flow, pay $2000 a month to the mortgages, refinance cause my property is now worth more and produces cash flow, then start over.
7eight9
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Re: struggling to get a mortgage

Post by 7eight9 »

NO DOC, NINA, SIVA, SISA Home Loans --- http://www.bankerbroker.com/offer-nina-home-loans

NINA loans make a comeback with the 360 Mortgage pilot program

Higher credit score borrowers can get a mortgage with an 80% LTV. But for borrowers whose credit scores are around 620, the maximum LTV is 65%.

If there is a problem, the borrower has enough equity where they can sell the real estate and any losses the servicer might incur will be covered, he said.

Because the loan is secured by non-owner-occupied real estate, 360 Mortgage is looking at the cash flow from the property in order to determine if the borrower can make the payment, rather than their income. That's what makes this "a vastly different product" than in the past, he said.

https://www.nationalmortgagenews.com/ne ... ot-program
I guess it all could be much worse. | They could be warming up my hearse.
TheDDC
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Re: struggling to get a mortgage

Post by TheDDC »

smoothnobody wrote: Fri Jul 24, 2020 5:53 pm yep, i want to play the game. debt isn't bad. it's the debt to income ratio that matters. with 200K i would pay in cash for 1 property bringing in $1500 a month i can do down payments on 4 properties with a mortgage, renovate, get $6000 a month rental cash flow, pay $2000 a month to the mortgages, refinance cause my property is now worth more and produces cash flow, then start over.
This sounds like a terrible idea and you’re going to go broke chasing it. You are looking to fast track wealth. Slow and steady wins the race.

Pay cash for your house. You have it, so use it.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex
megabad
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Re: struggling to get a mortgage

Post by megabad »

Sounds you have provided an easy answer to your own question. Seems like you could just work for one year, show six figure income on w2 and then get loans. Problem solved. One year isn’t going to kill you. I would actually wait two years so you can just do a primary residence cash out refi and then use all that cash for down payments on a few properties. I don’t know why any investor would want to buy right now with the prices I’m seeing but maybe your region is different.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

7eight9 wrote: Fri Jul 24, 2020 6:58 pm NO DOC, NINA, SIVA, SISA Home Loans --- http://www.bankerbroker.com/offer-nina-home-loans
sounds like hard money, will look in to it. thanks for the info. gives me more keywords to google search for. maybe it will put me in touch with the right lender for me.
TheDDC wrote: Fri Jul 24, 2020 7:06 pm This sounds like a terrible idea and you’re going to go broke chasing it. You are looking to fast track wealth. Slow and steady wins the race.
Pay cash for your house. You have it, so use it.
difference of opinion. you guys told me there is more than one way to skin a cat. some people like jumping out of planes. others like to wear belts with their suspenders. i won't knock your personal opinions cause we are entitled to them, but i will push back at you saying i'm gonna go broke chasing this. do you have a crystal ball? nobody can say what will or will not happen.

honestly, i'm not trying to fast track wealth. i don't really want or need the money. i don't know what to do with what i currently have. i just want to play the game. i want to win. thats what i really want. i want the bank to look at me and say ya guy we trust you you're pre-approved go shopping with our money.
megabad wrote: Fri Jul 24, 2020 7:15 pm Sounds you have provided an easy answer to your own question. Seems like you could just work for one year, show six figure income on w2 and then get loans. Problem solved. One year isn’t going to kill you. I would actually wait two years so you can just do a primary residence cash out refi and then use all that cash for down payments on a few properties. I don’t know why any investor would want to buy right now with the prices I’m seeing but maybe your region is different.
kinda, i know if i wait and start showing consistent cash flow for 2020 and 2021 i'm basically guaranteed a mortgage. but i'm also hearing if i show good numbers for my 2020 the most recent return will carry more weight than my less than attractive 2019 and with the rest of me looking good i have a good shot at a 3% mortgage when 2021 rolls around. so i'm scrambling to get my stuff together for this year. if i don't i have to let 2021 come and go so i can show 2020 and 2021 and that means i won't be making any moves 2022. i can't wait 6 months. i'm not waiting 2.5 years.
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Salty
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Re: struggling to get a mortgage

Post by Salty »

Sounds like you want validation and not differing opinions. This plan has many moving pieces. Each one can cause this plan to derail. *Look out below*
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

i disagree with that. i am willing to listen. in fact i enjoy different opinions. i will admit this plan has risks and "may" fail. but i will draw the line and reject anybody saying i "will" fail. choice of words matter. we can all say there is a chance or even a high probability of something happening in the future. but nobody can say with absolute certainty what will happen.
Last edited by smoothnobody on Fri Jul 24, 2020 9:08 pm, edited 1 time in total.
Normchad
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Re: struggling to get a mortgage

Post by Normchad »

I know many people personally who have become wealthy the “slow and steady” way, through patience and disciplines investing.

I do not know anybody that has done it with real estate. I know some that have tried, but none that succeeded. Most seem to regret Trump it, and lament how much time and money they squandered in the pursuit.

Best of luck to you. If you know somebody that has done this, it’s probably best to consult and learn from their experiences.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

i know a guy 15 minutes from me who just bought the most expensive property ever sold in the tampa bay area. all he does is real estate. his portfolio is 9 figures. he owns property all up and down florida. he was a broke kid from brooklyn who started fixing up crack houses and moved on to multi family and commercial real estate. i'm not trying to be like him, but just cause you don't know somebody who's done it doesn't mean those people aren't out there. don't get me wrong, i like the stock market, i'm not going all in in property, i'm gonna hold my securities, i just need something else going. i can't put all my eggs in one basket. two golden gooses is better than one.
Normchad
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Re: struggling to get a mortgage

Post by Normchad »

smoothnobody wrote: Fri Jul 24, 2020 8:07 pm i know a guy 15 minutes from me who just bought the most expensive property ever sold in the tampa bay area. all he does is real estate. his portfolio is 9 figures. he owns property all up and down florida. he was a broke kid from brooklyn who started fixing up crack houses and moved on to multi family and commercial real estate. i'm not trying to be like him, but just cause you don't know somebody who's done it doesn't mean those people aren't out there. don't get me wrong, i like the stock market, i'm not going all in in property, i'm gonna hold my securities, i just need something else going. i can't put all my eggs in one basket. two golden gooses is better than one.
Correct. You should be talking to that guy. Some people do this well. This board caters to people with a different approach. So you might not be able to get kind of advice you need, from members here. Talking to other successful real estate investors is the way to go.

The fact that it is hard to get a mortgage is a signal. Lenders are afraid you won’t pay them back. And with so little income last year, who can blame them. The market is saying this is a bad bet.

Professional football players make tons of money. But the overwhelming majority of all people that seriously pursue football never make a penny.

Very few accountants ever make pro football money. But nearly all accountants make very good money.

I think real estate is like football...... but some people do succeed at it, in spectacular fashion. And you might be one of those people. If this is where your passion is, I say go for it.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

Normchad wrote: Fri Jul 24, 2020 8:35 pm I think real estate is like football.
i can't disagree with this.
Normchad wrote: Fri Jul 24, 2020 8:35 pm The fact that it is hard to get a mortgage is a signal. The market is saying this is a bad bet.
this i do disagree with. the banks were too loose and giving money to anybody who said i make a million a year with no proof. while i agree tighter guidelines were necessary i think they are going too far in the other direction. if somebody has assets that exceed the properties value and they are willing to put down 50% and they have no debt and good credit common sense should come in to play. the problem is banks want to sell these loans and their hands are tied to fannie may rules. they aren't making a judgement call based on my merits. they are just looking at can i make money selling this guys loan and since i don't fit their once size fits all cookie cutter formula the answer is no.
Normchad wrote: Fri Jul 24, 2020 8:35 pm If this is where your passion is, I say go for it.
thanks. this is where my passion is. fixing up my current place was a epic journey. i went through bad guys and costly mistakes and growing pains but i made it through. now my place is sick and i want to do it again.
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arcticpineapplecorp.
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Re: struggling to get a mortgage

Post by arcticpineapplecorp. »

maybe ask your question on here:

https://www.biggerpockets.com/

I assume interest rates on p2p are too onerous?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Tamarind
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Re: struggling to get a mortgage

Post by Tamarind »

smoothnobody wrote: Fri Jul 24, 2020 7:23 pm honestly, i'm not trying to fast track wealth. i don't really want or need the money. i don't know what to do with what i currently have. i just want to play the game. i want to win. thats what i really want. i want the bank to look at me and say ya guy we trust you you're pre-approved go shopping with our money.
That's a sucker's game, IMO. I'd advise you to get your validation some other way. The game you're looking for does not exist. It's a fantasy people tell each other about on Reddit.

Since you have enough invested to cover your expenses, why not find a field to volunteer in? Do a little good with all that drive.
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Nate79
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Re: struggling to get a mortgage

Post by Nate79 »

Normchad wrote: Fri Jul 24, 2020 7:57 pm I know many people personally who have become wealthy the “slow and steady” way, through patience and disciplines investing.

I do not know anybody that has done it with real estate. I know some that have tried, but none that succeeded. Most seem to regret Trump it, and lament how much time and money they squandered in the pursuit.

Best of luck to you. If you know somebody that has done this, it’s probably best to consult and learn from their experiences.
Yes, the no debt version may be slower but it is also less risky and you can get exceedingly wealthy this route. The other side, take on as much leverage as possible can also get exceedingly rich yet is much riskier and much more likely to go broke. In the middle is probably ok but still need to acknowledge the added risk that comes with any leverage.

People in retirment often don't have an income per se and only retirement accounts. The strategy to get a mortgage may involve taking the income on a periodic basis from the accounts and showing that to the bank as income.
Last edited by Nate79 on Fri Jul 24, 2020 9:28 pm, edited 1 time in total.
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greg24
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Re: struggling to get a mortgage

Post by greg24 »

smoothnobody wrote: Fri Jul 24, 2020 5:08 pmi want to play the game.
You keep saying this. Do you really mean it?

Mortgage lenders want to see consistent income. Make that happen.

If you want to play the game, you have to play by their rules. Income.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

thanks for the link. i will poke around. just read a thread from some guy that just graduated high school has no income only $50 in his pocket and he's asking how to get a loan - LOL.

i don't think i've seen p2p mortgages. i've seen lending club. the rates blow on personal loans, 10-35% and can only borrow up to 40K. hard money is easy stuff they don't care about income or credit cause they get a bigger deposit and have the property as collateral. i can do that right now i'm just hung up on 7-9% instead of 2-3%. also want to be friends with the bank and have good mortgage history on my credit report.
Tamarind wrote: Fri Jul 24, 2020 9:21 pm That's a sucker's game. The game you're looking for does not exist.
i disagree. some people just don't play the game. others don't realize it's all a game.
Tamarind wrote: Fri Jul 24, 2020 9:21 pm Since you have enough invested to cover your expenses, why not find a field to volunteer in? Do a little good with all that drive.
i want to. i have. i will. but i don't exactly have what people call **** you money yet and i need to make sure i'm set cause i have nobody to fall back on. when i've mastered this and i'm rolling in it i will change directions.
Last edited by smoothnobody on Fri Jul 24, 2020 9:45 pm, edited 1 time in total.
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smoothnobody
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Re: struggling to get a mortgage

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greg24 wrote: Fri Jul 24, 2020 9:28 pm You keep saying this. Do you really mean it?

Mortgage lenders want to see consistent income. Make that happen.

If you want to play the game, you have to play by their rules. Income.
yes. i have nothing better to do. lets run with it and figure it out as i go.

i will make it happen. my big issue is i don't want to wait 2-3 years. i will not wait 2-3 years. if i have to get hard money or come up with other creative financing i will. i just prefer favorable rates.

i both agree and disagree with this last part. why can't i bend and flex the rules just a little bit? breaking the rules is one thing. dancing around them and walking through the gray area is another. there is a very fine line in all things and i'm willing to walk that line without actually crossing it. if i can get where i want to be faster without doing anything illegal i am happy to push the limits.
boogiehead
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Re: struggling to get a mortgage

Post by boogiehead »

If you have a significant amount of asset or cash at any bank (i.e. private banking) most likely they will make exceptions especially if you have a relationship with the manager or above or at least they will guide you on how to proceed.

If not can't you take a HELOC? Are the rates competitive with a 30 year mortgage? Never looked into it.
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AerialWombat
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Re: struggling to get a mortgage

Post by AerialWombat »

I get it. I went from bankrupt and homeless in the last recession to seven figures, multiple rentals, multiple companies by the start of this recession.

My advice? Relax. Go live, laugh, love, and LARP. Or whatever. You have won the game, go find something else to do.

Just my opinion.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

boogiehead wrote: Fri Jul 24, 2020 9:53 pm If you have a significant amount of asset or cash at any bank (i.e. private banking) most likely they will make exceptions especially if you have a relationship with the manager or above or at least they will guide you on how to proceed.

If not can't you take a HELOC? Are the rates competitive with a 30 year mortgage? Never looked into it.
i've already explored this. if i transfer all my assets to one institution i can borrow against it. but most places don't do this and this still does not qualify me for a traditional mortgage. i will fall in to specialty mortgages with rates that are 2-3 times higher. this would be considered "portfolio lending". it's no better than hard money lending. maybe even worse cause it dictates where i park my money.

heloc i have kinda looked in to but not fully dived in to all the details yet. it's on my to do list. it's like a home equity loan but the major difference is home equity loan is fixed rate and you get it all at once. heloc is mostly a revolving credit line with variable interest rates. they can reduce your available credit line at any time. both ways i have to put up my property as collateral. not a fan of that.
AerialWombat wrote: Fri Jul 24, 2020 10:01 pm My advice? Relax. Go live, laugh, love, and LARP. Or whatever. You have won the game, go find something else to do.
good advice. but i've been relaxing. i haven't worked since i was 19. it's time to make a move. i also have nothing else going on. i'm bored. this is the something else to do.
Last edited by smoothnobody on Fri Jul 24, 2020 10:16 pm, edited 1 time in total.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

AerialWombat wrote: Fri Jul 24, 2020 10:01 pm You have won the game.
these words.....
bikesandbeers
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Re: struggling to get a mortgage

Post by bikesandbeers »

smoothnobody wrote: Fri Jul 24, 2020 9:42 pm my big issue is i don't want to wait 2-3 years. i will not wait 2-3 years. if i have to get hard money or come up with other creative financing i will. i just prefer favorable rates.
boogiehead wrote: Fri Jul 24, 2020 9:53 pm If you have a significant amount of asset or cash at any bank (i.e. private banking) most likely they will make exceptions
A friend of mine whose family had 7 figures in a bank could not get a small (5 figure), small business loan without 2-3 years of management experience in the kind of business he was trying to start up. He bootstrapped it for 2 years and then got his loan.

Having a big bank account probably won't get you the loan, because even the branch manager can't make exceptions to standard lending standards. You can pay a high interest for a couple of years and then refinance a low fixed rate.

I recommend you read up up Casey Serin He "played the game" and took out a load of debt and lost it all in 06-07.

for my recent refinance, I provide two years of taxes, two years of w2s, bank and brokerage statements from every account, my 2 most recent pay stubs and the beginning of the loan process and again at the end. All for a 30% LTV refi. I am personally glad that the standards are that high so we don't end up with more Casey Serins
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

bikesandbeers wrote: Fri Jul 24, 2020 10:15 pm Having a big bank account probably won't get you the loan. You can pay a high interest for a couple of years and then refinance a low fixed rate.
it won't. unless i come up with something else, this is probably exactly what will happen. i'm just salty about 7% specialty loans instead of 3% mortgage. first world problems.

thanks for the link about casey. good cautionary tale. 8 properties in 8 months is going way above and beyond what my plans are. i'm comfortable with risk but i will not put it all on the line. thats why i'm weary about the margin account and anything that requires putting up my home as collateral.
runner540
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Re: struggling to get a mortgage

Post by runner540 »

smoothnobody wrote: Fri Jul 24, 2020 10:25 pm
bikesandbeers wrote: Fri Jul 24, 2020 10:15 pm Having a big bank account probably won't get you the loan. You can pay a high interest for a couple of years and then refinance a low fixed rate.
it won't. unless i come up with something else, this is probably exactly what will happen. i'm just salty about 7% specialty loans instead of 3% mortgage. first world problems.

thanks for the link about casey. good cautionary tale. 8 properties in 8 months is going way above and beyond what my plans are. i'm comfortable with risk but i will not put it all on the line. thats why i'm weary about the margin account and putting up my home as collateral.
Fixed rate 3% 30 year money is a creation of Fannie/Freddie and the Depression era to promote home ownership. Not a naturally occurring phenomenon (look around the world and you see shorter mortgage terms, variable rates, etc.), so if you want it you have to play by the program's rules.
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bottlecap
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Re: struggling to get a mortgage

Post by bottlecap »

Banks don’t like to play games. There’s your problem.

JT
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

that's cute, but not sure i agree with that either. if banks don't play games 2008 would not have happened. i think banks do play games, but the government stepped in and said hey knock it off.
TheDDC
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Re: struggling to get a mortgage

Post by TheDDC »

smoothnobody wrote: Fri Jul 24, 2020 11:06 pm that's cute, but not sure i agree with that either. if banks don't play games 2008 would not have happened. i think banks do play games, but the government stepped in and said hey knock it off.
Perhaps establish a source of income first, as in a job or starting a business. What are your goals? Are you currently self employed with lumpy income? Why would a bank lend to someone with no proof of income? Your interest in obtaining a construction job just for the W2 reminds me of a "no show job" which I thought was something only espoused upon in The Sopranos. I think there is a disconnect here between how you envision your skills, and what your end goals are in your head. This is basically a human flaw in which we all think we are the best at what we envision we are going to do even if we have no clue how to proceed before doing it. If you have the cash, pay for real estate in cash. Leverage and rental properties are a bad mix that can leave you broke. Having to pay mortgages on multiple properties with vacancy is a problem.

I agree with talking to the guy who makes 9 figures on real estate. Maybe he can lend you some money?

I don't think you will find many here who are sympathetic to what you are asking (leverage) for the simple fact that we focus on investing in securities using actual money and not leverage. Getting rich slowly and methodically works well here, and we have enough horror stories and train wreck posts from market timers. You can identify them by the fact that they had a slam bang post taking us to town on a specific buy/sell action tied to market timing, never to be heard from again or refusing to provide account statements with actual figures backing up their intellectual prowess.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

i'm open minding to starting a business, but i'm not interested in most things. this is one of the very few things that caught my attention. this is the goal. i don't think i have real estate skills, nor do i think i am the best at anything, but i am confident i will figure it out.

talking to ben has been on my mind. asking him for money sounds pretty dumb though. i know where he lives, he would respect being bold and stepping up, but don't think showing up at his door will work out well. he actually responds to peoples questions, and offers 10 minute phone calls for $100. i'm super conflicted on the phone call, but if i can get my foot in the door it's worth it.

don't need or want sympathy, its worthless. i want advice creative thinking and solutions.
rv26
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Re: struggling to get a mortgage

Post by rv26 »

If you have a large enough portfolio you could get a portfolio line of credit from M1 finance. If you're a plus member the interest rate is 2%, else its 3.5%. You would have to move assets to M1 and fulfill their diversification requirements. I have access to a line of credit with 70% of my portfolio in short term treasuries (SHV) and 30% VTI. The downside is you can only leverage 35% of your portfolio but the maintenance requirements on most stocks is 25%.
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AerialWombat
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Re: struggling to get a mortgage

Post by AerialWombat »

smoothnobody wrote: Fri Jul 24, 2020 11:29 pm
AerialWombat wrote: Fri Jul 24, 2020 10:01 pm My advice? Relax. Go live, laugh, love, and LARP. Or whatever. You have won the game, go find something else to do.
good advice. but i've been relaxing. i haven't worked since i was 19. it's time to make a move. i also have nothing else going on. i'm bored. this is the something else to do.
Then start a company that solves a problem. That’s what I did 5 years ago when I got bored. I’m the least likely kind of person to start a tech startup, but I did, it’s fun, and it’s worked out so far. You have money, go do something productive with it that solves a problem.

I’m also a real estate investor. That’s the most boring part of my portfolio. Being a landlord is not exciting, and you really don’t want it to be.

As others mentioned, you’re not going to get much support here for what you’re after. I’d suggest Bigger Pockets for real estate, or plug in to the startup scene. That sounds more your style (tech or not).
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unclescrooge
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Re: struggling to get a mortgage

Post by unclescrooge »

smoothnobody wrote: Fri Jul 24, 2020 8:07 pm i know a guy 15 minutes from me who just bought the most expensive property ever sold in the tampa bay area. all he does is real estate. his portfolio is 9 figures. he owns property all up and down florida. he was a broke kid from brooklyn who started fixing up crack houses and moved on to multi family and commercial real estate. i'm not trying to be like him, but just cause you don't know somebody who's done it doesn't mean those people aren't out there. don't get me wrong, i like the stock market, i'm not going all in in property, i'm gonna hold my securities, i just need something else going. i can't put all my eggs in one basket. two golden gooses is better than one.
You are looking for a partner to provide capital. Just because the bank turned you down doesn't mean you can't find someone else with capital.

If the deal is good, raising money should be easy.

Also, there are lenders who will loan to people in your position. But instead of putting down 20%, you'll need to put down 35% or 40%. So you are still leveraged.

If you truly want to start investing in real estate, you will figure it out.
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unclescrooge
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Re: struggling to get a mortgage

Post by unclescrooge »

smoothnobody wrote: Fri Jul 24, 2020 10:25 pm
bikesandbeers wrote: Fri Jul 24, 2020 10:15 pm Having a big bank account probably won't get you the loan. You can pay a high interest for a couple of years and then refinance a low fixed rate.
it won't. unless i come up with something else, this is probably exactly what will happen. i'm just salty about 7% specialty loans instead of 3% mortgage. first world problems.

thanks for the link about casey. good cautionary tale. 8 properties in 8 months is going way above and beyond what my plans are. i'm comfortable with risk but i will not put it all on the line. thats why i'm weary about the margin account and anything that requires putting up my home as collateral.
I bought a lot of properties at 7% rates and above.

People who flip houses routinely borrow at 10-12% and make money doing so.

If you can't make it work, then it's because you don't know how to. Fix that first.
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

i know i have options and can make it happen, just not giving up on a better rate just yet. gonna keep looking for a good way to push through. sometimes all you need is a good piece of information.
niceguy7376
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Re: struggling to get a mortgage

Post by niceguy7376 »

Just curious on the current financial situation of the OP.
Says the 2018 tax return is 6 figures but 2019 is 15K. What changed?
How old are you since you said you never worked since you turned 19.

How much does the current house value at and what other type of assets do you have?
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smoothnobody
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Re: struggling to get a mortgage

Post by smoothnobody »

30's, i made a few good moves had a windfall and went back to coasting.
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alpenglow
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Re: struggling to get a mortgage

Post by alpenglow »

smoothnobody wrote: Fri Jul 24, 2020 8:59 pm now my place is sick
Or is it ill?
chipperd
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Re: struggling to get a mortgage

Post by chipperd »

HELOC?
Sounds like you are looking for a traditional mortgage for a non-traditional financial transaction. Me thinks the banks will sniff that out pretty easily.
retire2022
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Re: struggling to get a mortgage

Post by retire2022 »

Op

You need a LLC or LP as a construction company to flip houses and a business plan to show that you can generate income. Once you been established for several years then you can get mortgages, it is that simple.

Anything else is a pipe dream.

I deal with real estate developers all the time, they either have a construction side or the business also known as identity of interest, or a management company side of the company. They got bigger once they entered into the development side of the business. Learn all three and you be on your way.

As others have alluded to patience this will take you several years to achieve.

Financial freedom and wealth comes from multiple sources of income.

I would seek out also sandtrap, he has lots of posts on realestate
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AerialWombat
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Re: struggling to get a mortgage

Post by AerialWombat »

retire2022 wrote: Sat Jul 25, 2020 12:40 pm Op

You need a LLC or LP as a construction company to flip houses and a business plan to show that you can generate income. Once you been established for several years then you can get mortgages, it is that simple.

Anything else is a pipe dream.

I deal with real estate developers all the time, they either have a construction side or the business also known as identity of interest, or a management company side of the company. They got bigger once they entered into the development side of the business. Learn all three and you be on your way.

As others have alluded to patience this will take you several years to achieve.

Financial freedom and wealth comes from multiple sources of income.

I would seek out also sandtrap, he has lots of posts on realestate
This is a conversation that one might try to rope Sandtrap into commenting on. To OP, if he doesn't respond to this thread, I encourage you to look him up on the board and read his posts. He was a multi-family developer/manager for many years. Probably the best real estate mind on this board.
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galawdawg
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Re: struggling to get a mortgage

Post by galawdawg »

CliffsNotes version: I'm in my thirties, haven't worked since I was nineteen. Made a bunch of money getting lucky on a windfall and now I am bored. I want to play the game and want to get into real estate, but I don't have any experience or skill in real estate. I have the money to self-fund but I want to play the game and learn with other people's money and I want to do it at the 2-3% rate that banks are offering other people. I don't want to pay the rates I'm being quoted as an unemployed person without a steady income stream. I want the money now and I'm willing to be flexible with the rules to make it happen. I'm bored and don't want to wait.

Did I summarize this thread correctly? If so, I can't for the life of me figure out why you can't get the sub-3% loan you are looking for...

Lenders are compensated more when borrowing involves more risk....hence the rate quotes you are receiving. You appear to be a high-risk borrower and lenders will demand a premium for taking on that risk.
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