Debt to Income when buying multiple properties

[Justin Griffin]

My fiancé and I are currently renting two properties with one being our guest house located behind our primary residence. We are wondering if our debt to income ratio is something to worry about when looking to purchase more properties? Is it true that most banks don’t consider rental income until it has been rented for over 2 years?

[Cameron Tope]

Hey Justin,

My clients and I have bought a lot of properties over the past 5 years in Greater Houston, TX and Ohio, and our lenders have always allowed us to count rental income as long as we had a signed 12-month lease. 

Now, some banks would only count 75% of the gross rents to account for maintenance and expenses, so if your properties barely cash flow then you may find yourself in a pickle. 

If you're applying for a business loan, then lenders want to see two years of tax returns on the business, but not for a rental property. 

Hope that helps!