Buying an Apartment Building, Lending After the Purchase

[Kenneth Morff]

Hey there BP Folks! My name is Ken. I don't post on her much, but I have a question. My wife and I are looking to finally dive into Apartment building investments. We are purchasing a rental right now, and then taking out the equity in our home and buying a 8+Unit Apartment Building this summer. Anyways, I was talking to our conventional financing lender about this next step, and she mentioned that unlike new residential loans, their company won't be able to use the income from the leases on the new apartment building until we file our taxes in 2019, and then they would use the income from our Tax Statement. 

My Question is, is this common for Conventional financing lenders to not use apartment building leases as income until our taxes are filed the next year?

So pretty much I'm looking for a lender in Minnesota, Saint Cloud, areas that might be able to help me out, or someone that is looking to sell their apartment building in the Saint Cloud or surrounding areas. I am always looking for deals!

[Tim Swierczek]

@Kenneth Morff Fannie Mae allows this if you have not yet filed taxes on the new property provided you have proof of the income, you can use 75% of the gross income vs the full PITI payment on the new apt building. Remember Fannie uses debt-to-income (DTI) but the commercial loan uses debt service coverage ratio (DSCR). This means that you could qualify with one method without qualifying for the other. Generally, I find that DSCR method is more forgiving than DTI.