There are any number of reasons a traditional bank will deny someone a loan on their investment property. Low income, low credit score, lack of landlord experience, debt to income levels, tax returns, self employed or lack of W2 income…it’s almost like they are searching for a reason to deny you. Don’t take it personally. Even experienced investors with excellent credit scores and large portfolios can have difficulty dealing with traditional banks (ask me how I know). So instead of taking it personally, you need to change your mindset and realize that it is the banks that have it wrong.
Real estate investing is hands down, one of the best ways to create and preserve wealth so don’t let a desk jockey at a bank end your real estate dreams. You either find the right lenders (on this site by filling out your loan request) or get creative.
There are lots of people out there with money but not enough time. You can partner with someone with W2 income (that doesn’t have time) and give them equity in the deal without them having to lift a finger. Their income gets them equity and your hard work gets you your equity.
This is exactly what it sounds like. The seller, instead of the bank provides the financing. There are advantages to both the seller and buyer for this type of financing. The seller gets consistent monthly payments and isn’t hit with a giant tax bill. And you, the buyer, don’t need to go through the colonoscopy that banks like to call underwriting.
You can also do a seller 2nd, where the seller holds a note for the down money of say 25%. Then you get a loan for the remaining 75%. Every month you would pay the bank or private lender for the 75% loan and you’d also cut a check for the monthly payment to the seller for their 25% loan.
You often hear this term and wonder where these unicorns are. The funny thing is, they are not unicorns at all. They are everywhere. Friends, family, coworkers, accountants, lawyers, friends of friends, bank tellers, realtors, diners next to you in a restaurant…these are all people that have done private lending with me to grow my portfolio to 127 rentals. You just need to start telling people about your real estate aspirations and start paying attention. They’re everywhere.
There are also financing options of: lease option, subject to, quit claim, sandwich lease options…the short answer? Traditional banks are just one of MANY ways to finance your real estate dreams.