Hello, I closed on a single family home in march, now I'm closing on what will be a owner-occupied duplex. I've gone from 29% to 35% debt-to-income ratio. I want to keep buying a house every year, maybe even two a year. I'm 23 years old. My question is really two-fold. First, How do I keep my DTI ratio down while still obtaining properties? Secondly, is there any ways you've (BiggerPockets Community) found in the past that have worked good for you in getting down payments for larger value property for 4 units or even 5 to 50 unit buildings? The bank has told me even when it is owner-occupied the down payment requirement will go up as the unit amount increases. I would like to add also I'm not really interested in getting a partner, I'm not a big fan of them on the basis of everyone having a different opinion or vision of how the company should look like in the future. Although, I may not be opposed to angel investing, depending on how the deal is structured. This Community has helped me out a lot in the past as well as my mentor in the past. I really appreciate all those who have taken the time to give back to society and even their own communities. America wouldn't have been where we are today without you.
well, ben, congrats on starting so young. i am over 50 now and i wish i would have started at your age. that being said, there is a lot to be said about experience also. keeping you DTI ratio down while financing real estate is going to be hard. after all, as your debt goes up, you need to increase your income an equal amount. obviously, you will have to take on some real estate on a contract basis, i. e., no bank loans. that way, you can claim the income without public knowledge of the debt. or you would need to find properties that increase your income without a huge increase in the debt amount. thats hard to do. crunch the numbers on every deal. if it does not fit your financial need, don't buy it. its pretty much that simple.
Maybe focus on larger multi's over 5 units. These properties are financed based on the financial metrics of the property, not @Benjamin Allen . You will still need a down payment, but the DTI becomes much less of an issue. Also, sellers of these are investors. They are more knowledgeable and more open to creative transactions.
Congrats on your first 1-1/2 purchases! It's ok to grow slowly!
Many lenders will allow you to use 75% of the income from your rentals. If you bought in a good market, your SFR should cover itself, and then your duplex won't be too expensive based on your other tenant bringing income to you.
Otherwise, skip the bank and look for the creative deals: FSBO and others
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