Rental properties affecting DTI
Member since 2024 · 9 posts · 9 votes
Rental properties affecting DTI
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Lender · Chandler, AZ · Member since 2023 · 88 posts · 48 votes
2yQuote from @Anthony Rondinelli:
Quote from @Tyler Warrick:
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
Greg brings up a good point, but keep in mind you can only offset the subject property income by using 75% of the rent UNTIL you file it on your tax returns. Only at that point can an underwriter recognize it as an income producing property.
Again, this is understood. What I am getting at, is if it is worrisome, or avoidable, as even a good deal(see scenario above) will raise DTI
In that case, yes DSCR loans closed in an LLC will not report to personal credit and won't affect your DTI.
Just make sure you do your due diligence as not every lender who closes a DSCR (individual or LLC) loan will avoid reporting to personal credit. A ton of brokers on here will take a DSCR loan to UWM and UWM will 100% report that on personal credit these days.
29 Replies
- 2yGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
- Lender · Member since 2021 · 495 posts · 130 votes2yYou will want to ensure you are claiming income on your return. While losses help offset taxes, not being able to count that income towards the mortgage can hurt you when purchasing something new.
Quote from @Anthony Rondinelli:
Hi,
If I want to maintain a healthy DTI for a primary residence conventional loan in a couple years, what should I be aware of, or what strategies must I employ? My current W-2 and rental income(4 duplexes in my name) have me at about 35%DTI, I am about to add another multi-fam property and it would bump my DTI to 46% even though it cash flows $2000...Do people simply start buying in LLCs(DSCR) at this point for this reason?
Any advice appreciated.
- Member since 2024 · 9 posts · 9 votes2y
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
This not true, mathematically.
take this hypothetical: Current DTI-35%- $3750 Debts/$11,000 gross income
add a property that PITI is $4000, Gross income is $6500($2500 positive cash flow), now your DTI has grown to ~44%...$7750 debts/$17500 gross income
- Member since 2024 · 9 posts · 9 votes2y
Quote from @Andrew Zamboroski:
You will want to ensure you are claiming income on your return. While losses help offset taxes, not being able to count that income towards the mortgage can hurt you when purchasing something new.Quote from @Anthony Rondinelli:
Hi,
If I want to maintain a healthy DTI for a primary residence conventional loan in a couple years, what should I be aware of, or what strategies must I employ? My current W-2 and rental income(4 duplexes in my name) have me at about 35%DTI, I am about to add another multi-fam property and it would bump my DTI to 46% even though it cash flows $2000...Do people simply start buying in LLCs(DSCR) at this point for this reason?
Any advice appreciated.
I do, and will count the new income.
- Lender · Chandler, AZ · Member since 2023 · 88 posts · 48 votes2y
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
Greg brings up a good point, but keep in mind you can only offset the subject property income by using 75% of the rent UNTIL you file it on your tax returns. Only at that point can an underwriter recognize it as an income producing property.
- Member since 2024 · 9 posts · 9 votes2y
Quote from @Tyler Warrick:
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
Greg brings up a good point, but keep in mind you can only offset the subject property income by using 75% of the rent UNTIL you file it on your tax returns. Only at that point can an underwriter recognize it as an income producing property.
Again, this is understood. What I am getting at, is if it is worrisome, or avoidable, as even a good deal(see scenario above) will raise DTI
- Lender · Chandler, AZ · Member since 2023 · 88 posts · 48 votes2y
Quote from @Anthony Rondinelli:
Quote from @Tyler Warrick:
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
Greg brings up a good point, but keep in mind you can only offset the subject property income by using 75% of the rent UNTIL you file it on your tax returns. Only at that point can an underwriter recognize it as an income producing property.
Again, this is understood. What I am getting at, is if it is worrisome, or avoidable, as even a good deal(see scenario above) will raise DTI
In that case, yes DSCR loans closed in an LLC will not report to personal credit and won't affect your DTI.
Just make sure you do your due diligence as not every lender who closes a DSCR (individual or LLC) loan will avoid reporting to personal credit. A ton of brokers on here will take a DSCR loan to UWM and UWM will 100% report that on personal credit these days.
- 2yJared RineBusiness MemberLender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
@Anthony Rondinelli..lenders have different nuances that have to be taken into account. It's not a one-size fits all. Some lenders are going to have overlays or not understand how to actually calculate rental income properly (full disclosure - I've closed loans that were turned down because of a banker or loan broker not understanding how to calculate income). There are lenders who even if you haven't filed your taxes can use the income to offset your PITI, which should barely raise your DTI, especially in the type of example that you mentioned. While you can't use any overage to help your income, you can offset (if the rents are enough) for a 1:1 and basically have no add to the income. In your example. $6,500 x .75 = $4,200 which covers $4,000 PITI. While you cannot use the $200 overage for income, it becomes a wash for the debt taken on, and should add nothing to your DTI. PM if need more info.
Jared Rine United Lending Partners53 Reviews - Member since 2024 · 9 posts · 9 votes2yWhy would it be a "wash" if it affects your overall total numbers negatively?
Quote from @Jared Rine:
@Anthony Rondinelli..lenders have different nuances that have to be taken into account. It's not a one-size fits all. Some lenders are going to have overlays or not understand how to actually calculate rental income properly (full disclosure - I've closed loans that were turned down because of a banker or loan broker not understanding how to calculate income). There are lenders who even if you haven't filed your taxes can use the income to offset your PITI, which should barely raise your DTI, especially in the type of example that you mentioned. While you can't use any overage to help your income, you can offset (if the rents are enough) for a 1:1 and basically have no add to the income. In your example. $6,500 x .75 = $4,200 which covers $4,000 PITI. While you cannot use the $200 overage for income, it becomes a wash for the debt taken on, and should add nothing to your DTI. PM if need more info.
- 2yJared RineBusiness MemberLender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
Jared Rine United Lending Partners53 Reviews - Member since 2024 · 9 posts · 9 votes2y
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio? - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Anthony Rondinelli:
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio?That is not how it works. If you have a PITI that will be 4000 dollars, but the property will bring in 5000. You will take 75% of that 5000 which is 3750. So, that would add 250 dollars to your debt to income ratio. In your example above now your debt goes from 3000 a month to 3250 a month. so, your DTI HAS gone up but only to 32.5% from 30%.
Look at this form from Fannie. You would be looking at the bottom section step 2b: https://content.enactmi.com/documents/calculators/Form1038.C...
Hurst Real Estate, INC4.989 Reviews - Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes2y
What @Greg Scott said : )
- Member since 2024 · 9 posts · 9 votes2yYou dont add the total new debt, and total new gross income(understood its after 75%, I was presenting my numbers after accounting for that)??...so again in my initial example: Starting with $3000 in debt/$10000 in income(30%DTI)...adding a property that PITIs $4000 and gross incomes(after 75%) $6000...you are telling me that you add the difference only to income, or debt if its not cash flowing? Not the totals? In this scenario my DTI would be $3000debt/$12000 income?(25%DTI) And not $7000 debt/$16,000 income?(43.75%)
Quote from @Jay Hurst:
Quote from @Anthony Rondinelli:
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio?That is not how it works. If you have a PITI that will be 4000 dollars, but the property will bring in 5000. You will take 75% of that 5000 which is 3750. So, that would add 250 dollars to your debt to income ratio. In your example above now your debt goes from 3000 a month to 3250 a month. so, your DTI HAS gone up but only to 32.5% from 30%.
Look at this form from Fannie. You would be looking at the bottom section step 2b: https://content.enactmi.com/documents/calculators/Form1038.C...
I feel like some of you are not understanding what I am actually asking...very possible im not asking properly... - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Anthony Rondinelli:
You dont add the total new debt, and total new gross income(understood its after 75%, I was presenting my numbers after accounting for that)??...so again in my initial example: Starting with $3000 in debt/$10000 in income(30%DTI)...adding a property that PITIs $4000 and gross incomes(after 75%) $6000...you are telling me that you add the difference only to income, or debt if its not cash flowing? Not the totals? In this scenario my DTI would be $3000debt/$12000 income?(25%DTI) And not $7000 debt/$16,000 income?(43.75%)Quote from @Jay Hurst:
Quote from @Anthony Rondinelli:
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio?That is not how it works. If you have a PITI that will be 4000 dollars, but the property will bring in 5000. You will take 75% of that 5000 which is 3750. So, that would add 250 dollars to your debt to income ratio. In your example above now your debt goes from 3000 a month to 3250 a month. so, your DTI HAS gone up but only to 32.5% from 30%.
Look at this form from Fannie. You would be looking at the bottom section step 2b: https://content.enactmi.com/documents/calculators/Form1038.C...
I feel like some of you are not understanding what I am actually asking...very possible im not asking properly...It is how I and the actual form that the underwriter would use lays it out. Again, the actual source. It is really simple, and you are vastly overcomplicating it. Please look at the @b part of the form I linked and let it do the math for you.
You have multiple who do this for a living telling you how it works. We understand what you are asking but you are maybe not understanding due to preconceived notions.
Hurst Real Estate, INC4.989 Reviews - Member since 2024 · 9 posts · 9 votes2yOk I looked at the form, that helped considerably. Seems the simple answer, is that yes, if you have a positive qualifying income you are good. If its negative it is added to your debt, but only the difference. I only wanted to know if this spread is used (positive or negative) or the total intital numbers...Thanks for the help, good to see that form!
Quote from @Jay Hurst:
It is how I and the actual form that the underwriter would use lays it out. Again, the actual source. It is really simple, and you are vastly overcomplicating it. Please look at the @b part of the form I linked and let it do the math for you.Quote from @Anthony Rondinelli:
You dont add the total new debt, and total new gross income(understood its after 75%, I was presenting my numbers after accounting for that)??...so again in my initial example: Starting with $3000 in debt/$10000 in income(30%DTI)...adding a property that PITIs $4000 and gross incomes(after 75%) $6000...you are telling me that you add the difference only to income, or debt if its not cash flowing? Not the totals? In this scenario my DTI would be $3000debt/$12000 income?(25%DTI) And not $7000 debt/$16,000 income?(43.75%)Quote from @Jay Hurst:
Quote from @Anthony Rondinelli:
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio?That is not how it works. If you have a PITI that will be 4000 dollars, but the property will bring in 5000. You will take 75% of that 5000 which is 3750. So, that would add 250 dollars to your debt to income ratio. In your example above now your debt goes from 3000 a month to 3250 a month. so, your DTI HAS gone up but only to 32.5% from 30%.
Look at this form from Fannie. You would be looking at the bottom section step 2b: https://content.enactmi.com/documents/calculators/Form1038.C...
I feel like some of you are not understanding what I am actually asking...very possible im not asking properly... - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Anthony Rondinelli:
Ok I looked at the form, that helped considerably. Seems the simple answer, is that yes, if you have a positive qualifying income you are good. If its negative it is added to your debt, but only the difference. I only wanted to know if this spread is used (positive or negative) or the total intital numbers...Thanks for the help, good to see that form!Quote from @Jay Hurst:
It is how I and the actual form that the underwriter would use lays it out. Again, the actual source. It is really simple, and you are vastly overcomplicating it. Please look at the @b part of the form I linked and let it do the math for you.Quote from @Anthony Rondinelli:
You dont add the total new debt, and total new gross income(understood its after 75%, I was presenting my numbers after accounting for that)??...so again in my initial example: Starting with $3000 in debt/$10000 in income(30%DTI)...adding a property that PITIs $4000 and gross incomes(after 75%) $6000...you are telling me that you add the difference only to income, or debt if its not cash flowing? Not the totals? In this scenario my DTI would be $3000debt/$12000 income?(25%DTI) And not $7000 debt/$16,000 income?(43.75%)Quote from @Jay Hurst:
Quote from @Anthony Rondinelli:
Quote from @Jared Rine:
My post broke the quick math down of your hypothetical situation. It shouldn't be affecting your DTI negatively unless something's wrong. Since 75% of the proposed income more than offsets the PITI of the loan, it's a wash. I don't know where you are, but you might want to get another analysis. If you're in CA or AZ, feel free to reach out. And to answer your question, yes, DTI issues are usually why investors start using DSCR loans. Which I also have experience doing.
No, it didnt. Adding even money to a 35% DTI could theoretically bring the DTI almost to 50%
Say you start with $3000 debt/$10,000 income(30%DTI)...then add a property that debts a million dollars and grosses a million....you now have debt of $1,003,000 and income of $1,010,000..whats that debt to income ratio?That is not how it works. If you have a PITI that will be 4000 dollars, but the property will bring in 5000. You will take 75% of that 5000 which is 3750. So, that would add 250 dollars to your debt to income ratio. In your example above now your debt goes from 3000 a month to 3250 a month. so, your DTI HAS gone up but only to 32.5% from 30%.
Look at this form from Fannie. You would be looking at the bottom section step 2b: https://content.enactmi.com/documents/calculators/Form1038.C...
I feel like some of you are not understanding what I am actually asking...very possible im not asking properly...Yes, now you have it. This is a very common issue that it seems a lot of LO's do not understand so they push borrower's to higher priced DSCR loans. or, they are not even licensed to sell anything else. Buying more properties, if buying correctly, simply does NOT increase your DTI or at least in my example above much at all.
Hurst Real Estate, INC4.989 Reviews - Lender · Nationwide · Member since 2024 · 12 posts · 5 votes2y
Anthony, it seems that you may be talking to the wrong mortgage companies when it comes to your rental properties as some have mentioned. You want to work with private money, not residential mortgage companies for investment properties. And I'm not saying this to earn your business just as if it was a residential property. I would say your best bet for your best rates and best payments would be a residential mortgage company. If you're interested in real estate investing, whether it's flipping or maintaining properties for rental income, it's important to work with a private money lender. They can keep those loans off your credit reports, allowing you to maintain financial flexibility and freedom. It's crucial to keep your personal finances separate from your LLCs and rental properties, and I strongly advise creating an LLC for each property that you work on. I'm confident that many private money lenders on here would love to help you, and I would be happy to assist you as well. So, don't hesitate to any of us But whatever you do, stop talking to a residential mortgage company because a private money lender only cares about your assets. Your credibility trust and a relationship. Not your debts or your income or your DTI or your reserves or the extra guidelines and underwriting and overlays that that a residential mortgage company can have
- 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Joseph Pappas:
Anthony, it seems that you may be talking to the wrong mortgage companies when it comes to your rental properties as some have mentioned. You want to work with private money, not residential mortgage companies for investment properties. And I'm not saying this to earn your business just as if it was a residential property. I would say your best bet for your best rates and best payments would be a residential mortgage company. If you're interested in real estate investing, whether it's flipping or maintaining properties for rental income, it's important to work with a private money lender. They can keep those loans off your credit reports, allowing you to maintain financial flexibility and freedom. It's crucial to keep your personal finances separate from your LLCs and rental properties, and I strongly advise creating an LLC for each property that you work on. I'm confident that many private money lenders on here would love to help you, and I would be happy to assist you as well. So, don't hesitate to any of us But whatever you do, stop talking to a residential mortgage company because a private money lender only cares about your assets. Your credibility trust and a relationship. Not your debts or your income or your DTI or your reserves or the extra guidelines and underwriting and overlays that that a residential mortgage company can have
Do you require a personal guarantee?
Hurst Real Estate, INC4.989 Reviews - Lender · Nationwide · Member since 2024 · 12 posts · 5 votes2y
Quote from @Anthony Rondinelli:
Hi,
If I want to maintain a healthy DTI for a primary residence conventional loan in a couple years, what should I be aware of, or what strategies must I employ? My current W-2 and rental income(4 duplexes in my name) have me at about 35%DTI, I am about to add another multi-fam property and it would bump my DTI to 46% even though it cash flows $2000...Do people simply start buying in LLCs(DSCR) at this point for this reason?
Any advice appreciated.
Regarding investment properties. Sometimes you may want to choose another mortgage company when it comes to your rental properties as some have mentioned. I'm not saying this because of what I currently do but what I've learned is when starting to flip or rent out many properties it would behoove you work work with private money or hard and not residential mortgage companies for investment properties at first. Some a short-term loan can also help you with DSCR loans with fewer regs and guidelines making your loan process much simpler. If you're interested in real estate investing, whether it's flipping or maintaining properties for rental income, I do feel it's helpful to work with a private money lender. They can keep those loans off your credit reports, allowing you to maintain more financial flexibility and freedom with your finances. Also creating an LLC for each property you move is a suggestion. I'm confident that many private money lenders on here would love to help you, and I would be happy to assist you as well. So, don't hesitate to reach out to any of us but I advise maybe that a residential lender may not be best for your situation. What's nice about a private money lender is that we focus on your assets, credibility, investor history, and relationship. We don't focus on debts, your income, your DTI. Many residential companies do have more guidelines, underwriting, and overlays that a private company may not have due to regulations that are looser on the private side, and why many investors choose private or hard money based on their situation. Yes there is much to talk about but as some mentioned prior, you should reach out and take a call with them and see how they can help your particular situation
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Tyler Warrick:
Quote from @Greg Scott:
You are talking to the wrong mortgage people. It is very common for the typical bank mortgage person to make this mistake. I've heard it first-hand.
A mortgage person that understands income producing properties applies 75% of the rent towards your income. If you are buying cashflowing properties, your DTI should improve with every property.
Greg brings up a good point, but keep in mind you can only offset the subject property income by using 75% of the rent UNTIL you file it on your tax returns. Only at that point can an underwriter recognize it as an income producing property.
that's for some lender ; for other lender they can use appraisal opinion.
to reduce dti from primary you could also attach lease agreement and proof of income. - Lender · Member since 2024 · 121 posts · 14 votes2y
Quote from @Anthony Rondinelli:
Hi,
If I want to maintain a healthy DTI for a primary residence conventional loan in a couple years, what should I be aware of, or what strategies must I employ? My current W-2 and rental income(4 duplexes in my name) have me at about 35%DTI, I am about to add another multi-fam property and it would bump my DTI to 46% even though it cash flows $2000...Do people simply start buying in LLCs(DSCR) at this point for this reason?
Any advice appreciated.
Most investors typically hit a road block at some point where conventional is no longer an option due to DTI, etc. That is when they usually start to transition in to asset based options such as DSCR
- 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @David Pearl:
Quote from @Anthony Rondinelli:
Hi,
If I want to maintain a healthy DTI for a primary residence conventional loan in a couple years, what should I be aware of, or what strategies must I employ? My current W-2 and rental income(4 duplexes in my name) have me at about 35%DTI, I am about to add another multi-fam property and it would bump my DTI to 46% even though it cash flows $2000...Do people simply start buying in LLCs(DSCR) at this point for this reason?
Any advice appreciated.
Most investors typically hit a road block at some point where conventional is no longer an option due to DTI, etc. That is when they usually start to transition in to asset based options such as DSCR
For most, if the math is done correctly, the LO is licensed and know what they are doing , it is 10. And that is because 10 is the max Fannie/Freddie will finance.
Hurst Real Estate, INC4.989 Reviews - Lender · Miami · Member since 2022 · 99 posts · 18 votes2y
A lot of great advice in this thread - while Greg is right, it's a common mistake, and the right lender won't have you running into this issue - I always recommend buying in an LLC.
As you expand your portfolio, employing LLCs and DSCR loans can be a strategic move. DSCR loans focus on the cash flow generated by the property rather than your personal DTI. These loans are typically not reflected in your personal credit as long as they remain in the LLC's name. This strategy can be particularly effective for investors like yourself looking to manage and expand their holdings efficiently.
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