Lots Of Money...but No Proof Of Income
okay here's my scenario. I have a good amount of money to invest (around $50K cash ). My only problem is that i don't have a way to verify where it came from. Without going into details, i basically quit my job about 7 months ago and have been working with on a cash-business. I've managed to save $50K and want to start investing it on real estate but don't know where to start.
My FICO score is 585 and i recently signed up with Lexington Law Firm ( don't know if they'll be any good or not ). I'm sure i can raise it up to at least 620 hopefully.
Someone told me that as long as i give about 20% downpayment, i can purchase and get a mortgage with No Income verification. I'm in IL and is this true? That same person told me that i will have to proove where i got the downpayment from. He said that as long as i have the money in my bank account for a at least 30 days, it wont raise the IRS eyebrows.
Can anyone help me ? Do i have to slowly deposit this money in my bank account before finding a property? also, what would you guys recommend for getting my feet wet.
If it is cash that you have, as you indicate, you can deposit it in the bank, and the bank will ask for some info. Nothing wrong with that - unless you got the money illegally. It isn't necessarily the IRS, but the feds who care, because it is money laundering that they are looking at.
A mortgage company may want to see the money being "seasoned." That means that they want to see the money in your account waiting to be used. It also helps prove that you can hold onto money without having it burn a hole in your pocket.
The other issue is, your fico score. If you have 50k, if you start paying down your revoloving debt (if you have any), or paying your bills on time, that would help your fico score. for the long term approach that would help you a lot. One of the things that I am sure that you learned from this website is that you may not want to go into a property underfunded, or having a lack of cash. Cash is KING. In other words, a recommendation from someone who has purchased quite a few properties (no where near some of the others on this site), pay down your debt, start paying on time, pay off all collections and judgements and bring your credit score up. Once your credit has increased, get many different lines of credit, so that you can survive if you need cash and don't have any of your own...
just my 2 cents
If it is true cash and you want to get it into the bank you don't want to deposit more than a couple thousand at a time. Theoretically you can deposit $9,999 before you have to fill out the form explainingwhy you have this much in cash but its easier to just put it in a little at a time so as not to attract attention.
I recommend you prepare a tax return accounting for this money even though it is cash,
Quote:pay down your debt, start paying on time, pay off all collections and judgements and bring your credit score up.Do NOT do this willy-nilly. Study www.creditboards.com and www.creditinfocenter.com for the proper techniques to make sure you get something (deletions, modifications of tradeline reporting to the 3 CRAs) for your money. A paid collection is no better than an unpaid collection from a FICO perspective, though it looks better to a prospective lender if you can get to manual review. FIGHT for the cleanest CRA reports you can get, and never let a collection agency's opinion of what that ought to be get in the way of you hanging on to your money until they see things your way.
Some people I have talked to here in Tennessee have started by simply finding extremely distressed properties, locating the owners (sometimes just knocking on doors) and offering them 10-20-25K cash for their house (I know a guy that has bought several nasty 2br slum houses for 10K). Then set up a cash closing at a closing attorney's office. Rehab the house, then set up a line of credit against it with a local bank or just sell it and then deposit the cash in a bank with a good reason (Yes Maam', I sold my house"
. Credit score will definately help and Lex Law is a big dog to work with. If you set up a line of credit, you can borrow for usually 4.5 to 8% interest only which is way less per month that any mortgage. Do your next property using the line, sell it, pay of the line, and so on...
If you run a business on a cash basis like you say do have reciepts? Anything proving how you got the cash?
Was the cash from investments (stock market, 401K, IRA, etc.) Was it from severance pay?
Did you have it in a seperate bank account?
Think of how you got the money and any documentation that you may have to prove how you got it. That is what is going to save you. You will also have to pay taxes on it unless it came from a tax free investment (Roth IRA cash out).
Otherwise you will raise the eyebrows of the FED and everyother agency looking out for suspicious activities.
Systematic deposits of cash into your personal accounts without proof of income (a job or profession) will also raise suspiction since most people are paid by check or EFT.
This sounds crazy but it does work. Call the IRS 800 number. They are willing to help and prefer to help than waste manpower on investigations and prosecution only to find out that a person enherited a mass amount of money that was stuffed in matress.
[addsig]