Here’s my story:
I am a college student and I have had my RE license since June of 2006. Since I began real estate, I’ve only made 45 - 50k. Real Estate was my first real job
I only have about 10-15k down for downpayment.
I want to invest in short sales. I KNOW i can buy these properties at 60-70% of true market value and I’m passing by lots of screaming deals because I fear I cannot get financed
Does anybody have any suggestions??
You stated that you are a college student as well as have a real estate license. You could try and wholesale some properties to make some extra money, but it will be difficult for you to find permanent financing without a history of income.
If your housing payment (rent or mortgage) + liabilities showing up on a credit report are relative low, then you may be able to still qualify with the income you’ve made. If the lender required both years tax returns for income qualification then you’d have about $1,875 - $2,083 (based upon your #s at $45k -$50k divided by 24 months). If going full doc, you may be able to get as high as 60% debt to income ratios. That is the your minimum monthly liability $ divided by monthly income. Some lenders may even allow you to use just 1 years tax return which works out even better for you if 2007 was more than 2006.
You never mentioned what price range you’re looking to invest into. This is important relative to how much you have for down payment. You’ll need at least 10% for 1-2 units. So all that built in equity wouldnt apply. There is another way but requires that you use 2 lenders. A hard money lender that bases the loan on the real value rather than the much lower sales price. This loan could be used for purchasing and would help minimize the out of pocket requirements. Since this is short term you’d then need to refi with a conventional lender. The refi conventional (rather than just straight purchase conventional) would have a LTV factored upon the real value. So your long term end loan would be 60-70%. Rates are much better than 90%. Downfall is 2 sets of closing costs. So you have to weigh out what works best unless you have a rich uncle. Many people use their lines of credit to pay cash for the property then turn around and refinances to accomplish the lower ltv.
Keep in mind that for long term financing, conventional lenders will require that you have at least 6 months of the expected mortgage payment with taxes/insurance included. Those funds have to be seasoned (in your account) for at least 60 days.
Sounds like you have some options and just need to get teamed up with a good mortgage consultant that specializes in investment loans.
You probably don’t qualify without income. Try to find private financing.