My credit scores aren’t that bad, 634-658-669. I just talked to a lender who claimed he could fund everyone and then proceeded to tell me he couldn’t fund me because I didn’t own my own home! Anyone else experience this road block? Does funding for people like me truly exist? I’m looking to fund my deals with OPM.
Hello, Your scores are not bad at all. You should be able to secure traditional financing. Use Hard Money Lender (HML) as a last resort. I guess that you are doing residential projects. There will be plenty of help here on this post for you. Good Luck.
Trixy,
What is your investment strategy?
I live near several revitalization areas in Prince George’s County Maryland. I’m looking to buy a property that’s either undervalued or in distress in a revitalization area, rehab it and sell it 6 months later (because of seasoning rules).
Another strategy that I’d be interested in is purchasing a single family home to be used as a rental. I’m most interested in properties near the colleges and universities to increase the likelihood of tenants.
I called a lender today, with 2 properties in mind. The first was near a University and owned by husband/wife investors. They were asking 365k to sell quickly as they were moving to FL and looking for investment opportunites there. It had previously rented for 2450/month and rents in the area are at 2500/month or more. It was a 5 bedroom house with kitchens and bathrooms on 2 of the 3 levels.
The second was in a revitalization area, but it was a condo. Owner had the place listed with an agent at 84,500. The present tenant had a lease up through Mar. 06. The listing said it needed some cosmetic repairs, so I was thinking 10k just to be on the conservative side. I was planning on doing the renovations in the few months after the tenant left. At that point it would be seasoned and ready to be sold. I could cover payments on my own for another 6 months if necessary.
I looked at a few HML’s and the cost of generating the loan would eat a considerable chunk out of any long- or short-term profits so I thought I’d hit up a traditional lender. Turns out this guy said I should wait until I purchase my own home first and then come back and he could find me a bank that would lend me money for investments. I’m trying not to use my own money. I would much rather use OPM. Has anyone else run into this problem with banks?
Depending on your other parameters (income, assets, etc.) you should not have a problem gaining conforming funds for these transactions. You may even qualify for 90-100% financing.
I think I might be able to go stated income if I can raise my credit scores a bit. Here’s my predicament: I’m a graduate student finishing in December. I’ve been at my current place of employment for the last 3 years, but I’ve been part-time for all of 2005. I can verify the last two years of income with my W2’s but my current paystubs won’t show a decent income. So I guess my question is should I actually wait until January to begin investing. I’ll have a new job with income that I can verify with paystubs, and access to a bit more cash as I’ll be cashing out my 401k from my current employer (valued at 15k)
Shania
With the scores that you quoted earlier and the assets that you stated you should be able to find funds. It may take some research on your part but they are available.
I have a similar situation as the client is in another State and does not have a primary property (is renting) and she is not having any problems.
With that said, I’m definitely still researching. I’m not going to let that one phone call stop my plans. In fact, I plan on making a lot more during the week to see who may be able to help me. My other question is this, is there a way for me to secure funding without touching my 401k?
Absolutely…dozens of ways! I recommend do NOT touch your 401K for REI! There’s just too much tax consequence…
Keith
Ok. I’m definitely going to keep searching. I’d just like to line up some financing first because so many properties are listed with agents who want a pre-qual letter or proof of finances.
Hello, Why not kill two birds with one stone. Convert your 401K into an IRA and use it to purchase RE and build your retirement. Check out this website:
www.realestateira.com
Look under “Checkbook Control IRA”. I hope this information helps and gives you another option.
I’ve thought about that as well. Only problem is that I can’t convert until I leave my current place of employment–roughly January. I am going to convert it to an IRA–there’s no way I want to take that tax hit. And thanks for the site, I had no clue on how to use my IRA to fund REI’s. Thanks.
Shania
Hello Shania, I’m glad that I was able to help you.
Good luck.
Hey,
Go to www.trustetc.com. They have plenty of info and I have used these guys since 1996 to fund property with my self-directed IRA.
Peace,
Richard
To comment on your original question: many lenders do have restrictions on buying an investment property if you don’t own your primary residence. Also, some lenders have restrictions on owning more than one investment property if you don’t own your primary and haven’t owned the first IP for at least 2 years (landlording experience).
Thanks. That’s good information to have. I’ll just have to look for lenders that don’t have those restrictions. Any idea why it’s that way? Living in an apartment is my personal choice. I like the freedom of being able to leave within 30 days. I’m not sure how that should affect my ability to invest.
Shania
Owning you own home just potentially allows the lender to come after your personal residence in case of default.
Renting (living at home with parents even) will not keep you from qualifying to purchase an investment property if your credit and assests are in order.
Regards,
Pat Lawson
You have a OK credit score. Remember that hard money is
kind of expensive.
Thanks much. I’m not looking to use hard money permanently, but I’d like to use to get my first few deals underway. I’m currently looking at a hud property that I’d like to get hard money to finance. Thanks for the info.
Shania
Why use hard money when you don’t have to? ???