Today’s REI Classroom Lesson

In the classroom today, Stephen Bighaus explains assets that you can and can’t utilize when talking about investment property financing.

REI Classroom Summary

Stephen Bighaus elaborates on assets that are allowable and some that are only allowable under certain circumstances. Find out what you can and can’t use in this lesson!

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let’s meet today’s expert host.

Steve: This is Steve Bighaus, Security National Mortgage, host of the REI Classroom. Today’s topics are going to be what are allowable assets for investment property financing.

Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.

Steve: This question comes up a lot. You’ll get whether they’re seasoned investors or new investors, and particularly new investors. What can I utilize? What can’t I utilize? That sort of thing. So let’s just talk about what you can utilize. Obviously, money in your checking account, savings account, stocks, bonds. We can even use some retirement accounts.
Now, with the retirement accounts, a little tricky because we need to look at the terms of your retirement account, your ability to be able to pull some money out if you can do that, whether it’s a loan or you can actually pull cash out of that. That’s perfectly acceptable. What is not acceptable, big no, no, gift funds. Gift funds are not allowed. If it’s not your money, you can’t utilize it. So in other words, if you get a gift from a friend, a family member, you cannot utilize that in investment property financing. So really tricky.
Now as a lender, when we’re looking at your bank statements, we’re going to look at deposits going in and out of your account. Well, not so much going out but more going in. So we’re going to have questions, and so if we see a large deposit we’re going to paper trail the deposits. We have to verify the source of where that money comes from, so it’s really important. Again, a lot of times we’ll get people that’ll get some money from somebody. We’ve got to paper trail that.
The other thing that you’re not allowed to utilize is cash on hand. So in the industry we refer to that as mattress money. So some people might have cash that they haven’t put in the bank. Not acceptable. You’d have to put that into a bank and you would have to season for a full two banking cycles, that’d be approximately 60 days. So it’s not something we can utilize.
We do have some people and occasionally this does come up with precious metals and so we’ll have people that buy precious metals. Now, I’m familiar with that because at a couple of banks that I work at, we tell them both with precious metals, you have to provide the original sources for the purchase when you’re doing the precious metals and then you need to take it to the bank and then what they’ll do is they’ll issue a receipt when you cash it in as far as what the current market is for those precious metals, and then you’ll need to provide that with it. But really important that you have that initial receipt when you purchase the money. If you don’t, I’m not going to be able to utilize it, and so it’s just one of those things.
A lot of people find that a little intrusive. Unfortunately, that’s just the way the industry is right now and that they’re really looking at money. Want to make sure that people aren’t laundering money. So it’s strict. I mean, it really is.
So any additional questions, feel free to give me a call. Steve Bighaus, Security National Mortgage, host of the REI classroom and thank you very much this morning.

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Stephen Bighaus
Steve Bighaus has over 28 years experience in the mortgage industry. He maintains a focus on servicing the real-estate investor by offering aggressive financing options and resources for buyers interested in purchasing or refinancing their investment property. By concentrating on investment properties and the financing that comes with them, Steve is recognized nationally as an industry expert. The knowledge that he has enables him to find financing for people even when they have had difficulty elsewhere.
Stephen Bighaus

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