Investor Rehab Financing HOW? NEED HELP ED!! - Posted by Keith C

Posted by Frank Chin on February 04, 2001 at 08:01:59:

I’ve been involved in Real Estate for 20 years doing mainly 2 and 3 family homes. Then got tired of Software last July after doing it for 15 years. I quit my job to concentrate Real Estate.

The problem we had was:

1- Rental Income replaced my wife’s salary, but not both.
2- As we bought more and more properties with income check loans - the credit scores and ratios got lower and lower. We thought it was ridiculous that we BEARLY made the last loan with 150K combined salary with rental income to boot.


Even if we worked and want to buy more real estate - we would need three jobs to get the bank’s ratios come out right. But then we would not have any time to manage the real estate.

Our restructuring Plan involves:

1- Selling our residential portfolio
2- Buying Commercial Real Estate.

We’re looking at a number of commercial deals right now. The main points:

a- Commercial loan rates run 8.5%.

b- Lenders look at income from the properties - not your W2. They look at personal credit, but mainly to see you’re not a crook.

c- Downside is principal amortization runs higher.

d- However- higher returns makes up lots of the difference.

e- There’s more seller financing available. Most are tired landlords in their 70’s wanting out who paid off mortgages years ago.

f- We’re also thinking of foreclosures and rehabs again. However, we will pay all cash - thus not requiring income and credit checks.

Investor Rehab Financing HOW? NEED HELP ED!! - Posted by Keith C

Posted by Keith C on February 01, 2001 at 22:42:07:

Hi Ed,

I was reading an answer you gave on the finance board and hoped that you could possibly expound on something for me… I have been a sole real estate investor now for 3 years - I left my 17 year Software Engineering career after doing both for 6 years. But now because of the unfairness of the FICO scoring system coupled with the fact that I have a lot of real estate (i.e., much debt) my credit score is 620 or maybe alittle below - the system doesn’t bother to take into accout the persons income! Thus, it is a serious hinderance to me in this industry of Real Estate investing. I am liquadating all of my rental property and am buying smaller buildings (1-4 units) for flipping and need to pursue financing for these rehab projects. Also, because I am not gainfully employed on a 9-5 job now the banks need to see proof of income from my tax forms etc. But how can they determine the real picture since every real estate investor I know always shows less than they really make every year? Do you have any suggestions on what the best approach is for this scenario? I am in Illinois and currently have several projects (single family homes) that need funding quickly - particularly acquisition and rehab costs. This ridiculous scoring system is so bad that everytime you simply want to check your own score it causes your score to drop because of so called excessive inquiries - who ever wrote that software program needs to be flogged!