high dept to income due to invedtment property

2 Replies

hi all quick question... i hit a wall .... where i bought a property 5 years ago it appreciated greatly just refinanced it so i took out my initial investment and then some ......for 20 years at 3.5 % but now my debt to income is high and its hard for me to qualify for a regular mortgage due to high real estate prices. so i want to buy 1- 2 properties but there lies my problem. also i had to personal guarantee my 4 plex

@Marcin Godlewski , moral: only cash out the amount that does NOT harm your DTI.

ie. The cash flow afterwards should still conservatively be covering MORE than all its debt/expenses, right?

So, if the amount you DID take out isn't enough of a deposit to get you the loans you need to get the next deals, perhaps those NEXT deals aren't so great after all? Get what I mean?

ie. Portfolio Lenders lend against property appraisal and its income (rather than your income), right? My 2c...

Hey @Marcin Godlewski this is a common problem in the investment property space. Great options are portfolio lenders and non-bank direct lenders, or private lenders. Portfolio lenders will offer you the best rate, but it may be tough to find one that will work with you. Non-bank direct lenders will lend to you similar to how a portfolio lender may, they look at the property's rental income instead of your personal income. Non-bank lenders do not look at your debt to income. The rates will be a little higher, in the 7%-8.5% typically (some may start in the 6% and go up to 9.9%). Non-bank lenders are a better option than hard money lenders in your scenario if you're looking for a buy & hold/rental property. Non-bank lenders will offer you 10-30 yr loan terms whereas a hard money lender will offer 12-36 months at a higher rate. 

Private lenders are an option. Private lenders refers to individuals who lend out their money. Their terms will vary as it's not uniform. They may structure the deal unlike a bank would too where in they share in some of the upside/equity.

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