I've read Bigger Pockets forums for a while but this is my first post.
I have 4 long term rentals in my city and 1 Airbnb property in the mountains about a 2-hour drive away.
At this point, I have a contractor I like, set up a system for dealing with tenants, been to tenant-landlord court to evict, and feel pretty confident in what I have.
The problem is that I can no longer get a loan to buy new property because my debt-to-income ratio is too high (from the other properties). This also means I can't refinance properties.
How can I keep moving forward?
One thought I had was that I could get a friend with a high income to sign up for the mortgage with me so the debt-to-income ratio would be fine.
Another option would be to find private money.
Are there other ideas out there? What do people generally do when they hit the maximum for debt-to-income?
Originally posted by @Ken Barton :
Hi Jake, I'm Ken the owner of Hoasty.co. Have you considered borrowing money from your friends or relatives? Debt from them will not gain interest and the payment is more flexible.
Yes, when I said "private money", I meant friends and relatives, as well.
I don't mind giving them interest as a way of saying "thank you" and being fair so that's not a problem.
Is this the normal way that people get past not receiving loans from a bank? Is there really no way to work with a bank at this point?
There are portfolio loans that go based on the cash flow of the rental property. They do have loan minimum amounts, and the rates are higher than conventional, but it is better than hard money.
Portfolio lenders. There are a few that will do short term rentals.
There is a short term rental forum here on BP, btw. Come share your experiences if you haven’t done so already.
Can you do portfolio lenders and then refinance to conventional loan to lower the rate? How does one overcome the "short-term" in case you can't pay off within the set period?
Appreciate any answer to my rookie question!
Why not begin looking for owner-finances deals? Can save a lot of money rather than a hard money lender. You may have to make 100 offers to find one person willing to take it but such is life, and the reward will most likely be worth it. I like the concept because you can be creative with your terms and more motivated sellers might be willing to give you better terms than the bank even!
It sounds like you have a common problem of deploying all your capital into deals that do not generate a ton of net cashflow you can use to replenish your downpayment kitty in a short time. When you have a lender you have dealt with and understand their underwriting guidelines better, you can start looking for deals that will not pigeon hole you with DTI problem.
Another option is to keep some cash moving by flipping and selling instead of just doing buy and hold. Flip, Flip, Hold, Flip, Flip, Hold reinvesting your net profits in a buy and hold. Another option is to approach a bank about opening a working line of credit. Hard money from lenders or friends with rates at 8% and above is ok for short term but will eat your profits in the long run.
@Jake Wakefield any way you could partner with some others who can get a loan?