Hey all I have searched the forums but don't seem to be finding the answer I am looking for. My question is related to a commercial mortgage with three partners holding an apartment building in an LLC. Since the LLC is new we will have to personally guarantee the debt. My question is since we each guarantee the debt it is my understanding that the liability is 100% counted against our DTI ratios. However we are only able to offset our DTI with our percentage ownership of the profits which in this case is 33% each.
To better illustrate my question below is how I roughly understand how the DTI calculation for our partnership would work.
Partner 1 Net Income share: $50,000
Partner 2 Net Income share: $50,000
Partner 3 Net Income share: $50,000
For this example each partner would have there DTI negatively affected by $50,000. Is this understanding correct?
Is there a solution to this? Can we just personally guarantee 33% of the loan each so our DTI does not take such a large hit? Another option I thought of is alternating which partner personal guarantees the loan for each deal. It's not a huge issue for the first couple of deals but something I want to be mindful of as we grow.