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Do you know why the building is 50% occupied? Do you have a plan to rent out the other units? Have you worked out a pro forma to show what your debt coverage ratio would be if the duplex is close to fully rented? If so, by showing your plan to a potential lender that could help you reach your goal of loan approval.

I'm just analyzing the deal now but I talked to the owners son. His mom owns and manages the property. She's getting older and he wants her to sell. Plus, he said that there is some work which needs done. I'm not sure if they want to put anymore money into it.

@Account Closed  

HI Daniel,

If the property is in rentable condition, this is a 1-4 unit residential property, then you can use 75% of the proposed rental income to qualify against your net mortgage payment if  you're purchasing as a non owner occupied property.

So yes you can use rental income even despite not having all of the units full. You cannot use the rents if its a refinance unless you actually have tenants renting currently or unless if you have a past history of the rental on your prior year's tax return. The considerations for rental income usage for purchase and refinance are different.