Updated about 4 years ago on . Most recent reply
Buying personal property mid BRRRR
I have a question i am struggling to get answers for.
I currently own 2 rental houses and my wife owns our personal residence in her name. My latest purchase was funded through a family member where they loaned us the money to purchase the house in cash (in my name) and i payed for the renovations and currently rent it out with the goal of doing a cash out refi early next year.
Meanwhile, our dream house has come up and we qualify to buy it, but I'm worried it will mess up my DTI to be able to cash out of my BRRRR deal.
So my question is do brrrr cash out refi's all deal with DTI or are there some more creative options that follow a different formula (I've read a little about some commercial lenders just making sure 75% of your rent will cover the mortgage?) I have steady W2 income, but with adding more rentals i think i need to find a way around DTI to continue scaling.
Any thoughts? My wife and i really want to put an offer on this new house, but i want to make sure I’m not biting off more than i can chew, and be 100% positive i can cash out of my other brrrr deal to be able to pay back my gracious family lender with interest (as planned).
Most Popular Reply
People make too much of the DTI and Fanny and Freddy guidelines. Work with local banks and credit unions. Get to know the commercial lenders. All of my properties are on commercial mortgages except the one I own outright. The interest rate is a bit higher, but I'm cash flowing well, so its gravy to me.
Commercial lending immediately considers rent as income, whereas personal banking needs to see the rent payments season for two years before including it as income. I found it helped to divorce from questions of rates, because they're misleading anyway.