How can I expand my rental portfolio?

4 Replies

Hello, I am a new investor trying to expand my rental portfolio. My problem is getting approved for a loan because I already have two rental properties (Two four-plexes) that both still have mortgages on them. When contacting my lender for future loans, he explains to me my debts (both mortgages) and tells me my debt to income ratio will not let me take on more debt. These are the only debts I have on my name. I have saved enough for a 20-25% down payment but still that is not enough for the lender. I understand I can go commercial but the interest rates are too high for me. Any feedback is very much appreciated. Thank you.

Have you tried another lender? If your properties are cash flowing they shouldn't count against your DTI I believe. I also wouldn't discount commercial/apartments. While the commercial banks are rebounding from COVID more conservative, asset based lending may be what you need if another lender gives you the same DTI answer. The commercial arm of my brokerage was doing loans pre-COVID at sub 4%...

What markets are you looking in? 

@Jose Beltran I would take @Cory Carlson 's advice and speak to a few other lenders. Just because one lender is telling you no, doesn't mean they all will. If you're still having a tough time after talking to several other lenders, maybe consider getting a partner or looking for a seller financing deal. 

Best of luck!

@Jose Beltran

I agree with the others try other lenders, but things are tightening up. You'll need great numbers to pull this off. Have you actually looked at commercial lending it's not as bad you think unless your numbers are tight. No DTI with commercial lending. Go with small local banks and see what they say. The local banks are generally easier to work with.

If considering going the commercial route, send me a PM. Financing is not secondary, and should be tailored to fit your strategy. A commercial mortgage broker will be able to negotiate terms that fit your strategy. What markets are you interested in and what is the current financing position in your two properties?