Welcome back to your go-to show for unlocking financial freedom through the power of commercial real estate investing! Today, we’re tackling a topic that often stops aspiring investors in their tracks: how to buy multifamily property with no job or income. Sounds impossible, right? But here’s the truth—it’s not! Whether you’re starting from scratch, stuck scaling with single-family homes, between jobs, or simply done with the 9-to-5 grind, this guide is for you. Let’s dive in!

Is This You? Five Common Scenarios

Before we get into the strategies, let’s identify where you might fit in. Here are five common scenarios—see if any resonate with you:

• Stuck with Single-Family Rentals: You own single-family rentals but realize they won’t provide the financial freedom you need. You can’t retire, cut down work hours, or generate enough cash flow.
  Is this you?
• Laid Off or Between Jobs: You’ve been laid off or are in between jobs, but you still want to invest in multifamily or commercial property.
  Is this you?
• High Debt-to-Income Ratio (DTI): Your personal DTI is too high for traditional bank loans, but you’re determined to keep investing.
  Is this you?
• Done with the 9-to-5: You’ve quit your job or been laid off and refuse to go back. You want to invest in multifamily properties full-time but don’t know how to secure financing.
  Is this you?
• Ready to Take Action: You’re done making excuses. It’s time to improve your financial life, and you’re ready to take the leap now.
  Is this you?

If any of these sound familiar, you’re in the right place. Let’s explore two powerful strategies to overcome these obstacles.

Strategy 1: Non-QM Multifamily Loans (DSCR Loans)

The first strategy is Non-Qualified Mortgage (Non-QM) Multifamily Loans, specifically Debt Service Coverage Ratio (DSCR) Loans. These loans are designed for creditworthy borrowers who don’t fit traditional lending criteria. Here’s how they work:

• No W2 or Proof of Income Required: Your loan approval is based on the property’s income, not your personal income.
• Credit Score: A minimum score of 660 is required, but higher scores get better terms.
• Property Type: Multifamily properties with 4 to 50 units that are stabilized (no major repairs needed).
• Loan Amount: Up to $5 million with a 20-25% down payment.
• Interest Rates: Slightly higher than conventional loans (0.5% to 1.25% more).
• Loan Terms: Typically 5, 7, or 10-year balloon payments, with interest-only options available for up to 10 years.
• Foreign Nationals Welcome: Non-U.S. citizens can also qualify.
• Gift Money Allowed: You can use gift funds for part of the down payment.

Key Requirement: Cash Flow

The property must generate enough income to cover the mortgage payments. The Debt Service Coverage Ratio (DSCR) should be at least 1.2, meaning the property’s income is 1.2 times greater than the mortgage payment (principal, interest, taxes, and insurance).

Example:

• Purchase Price: $1 million (8-unit property)
• Gross Rental Income: $116,000/year
• Mortgage Payment: $69,192/year (principal + interest)
• Taxes + Insurance: $18,400/year
• DSCR: 1.32 (above the 1.2 threshold)

This deal would likely qualify for a DSCR loan.

Strategy 2: Creative Financing (Master Lease Agreement)

If traditional loans aren’t an option, creative financing through a Master Lease Agreement might be your solution. Here’s how it works:

• No Banks Involved: You lease the property from the seller with an option to buy.
• No Credit Check: Your credit score isn’t a factor.
• Low Down Payment: Typically 10% down.
• Seller Motivation: The deal is structured around the seller’s needs, such as maintaining income or deferring capital gains taxes.

How It Works:

1. Down Payment: You provide a down payment (e.g., 10% of the purchase price).
2. Equitable Title: You gain control of the property, collect rent, and pay expenses.
3. Monthly Payments: You make interest-only payments to the seller.
4. Future Equity: You benefit from any property value appreciation.
5. End of Term: After 5 years (or agreed term), you pay off the remaining balance.

Example:

• Purchase Price: $1 million (8-unit property)
• Down Payment: $100,000 (10%)
• Interest-Only Payments: 45,000/year(545,000/year(5900,000 balance)
• Gross Rental Income: $116,000/year
• Expenses: $46,000/year (40% of income)
• Cash Flow: $25,000/year
• Cash-on-Cash Return: 25%

This strategy is ideal for sellers who are tired of managing the property, want to defer taxes, or have properties that don’t qualify for traditional loans.

When to Use a Master Lease Agreement

Here are four scenarios where a Master Lease Agreement makes sense:

1. Seller is Tired or Burnt Out: The seller wants to sell but still needs income.
2. Deferring Capital Gains Taxes: The seller doesn’t want to pay taxes upfront.
3. Property is Not Bankable: The property has vacancies, needs repairs, or lacks financial documentation.
4. Seller’s Personal Circumstances: The seller is in poor health, relocating, or facing financial difficulties.

Financial Freedom

If you’ve been held back by a lack of income, high DTI, or the limitations of single-family investing, these strategies can help you break through. Whether it’s a DSCR Loan or Creative Financing, the path to financial freedom through multifamily investing is within reach.

Remember: The best time to invest in real estate was 5 years ago. The next best time is today. So, take action, explore these strategies, and start building your financial future.

If you found this helpful, don’t forget to subscribe for more insights on commercial and multifamily real estate investing. Let’s get to work and make your financial dreams a reality!

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