I am self-employed (I write off a lot), and I purchased my first BRRRR a couple weeks ago. I am in the middle of both renovations and a refi on the hard money I currently have in place.
Another property has fallen in my lap, and I have a private equity partner lined up for this property. However, the lender for my refi (who does a ton of investor loans) says purchasing this home (even with cash) puts my DTI over their threshold and jeopardizes my refi.
I would still like to proceed with this second home, but how should I do so? Do I ask my buddy (private equity) to just buy the home himself, putting the deed in his name while I do the work on it, and then we deed it over once my refinance is done?
I am in option on this second home, and I am set to close on Monday. What do I do?
@Chris Grizzaffi , can you close the refi and then buy the new property? Otherwise start shopping for another vendor.
@Jaysen Medhurst , Thanks. I think I've worked out a solution.
@Chris Grizzaffi . Did you find a lender who would REFI without any DTI Requirements?
All the best,
@Chris Grizzaffi - happy you found a solution. There are, non-bank, investment property lenders that will lend to you based on the property's income (long-term rental loan) or your experience for fix & flip / rehabs. Rates are higher than conventional but there are perks, like the fact that they don't require proof of income/DTI, lend to LLCs, and close quicker.
This is good to know, George. Thanks for the insight. I will likely look into this for the future though!
Ultimately, my equity partner is a good friend, and time was of the essence. He bought the house, and I am working through my refi on my first property right now. I know this is not ideal, and some advised me that this manner is risky - like him never transferring the property, but I believe we have it worked out properly.
Both properties have great numbers and will be excellent rentals.
Originally posted by @Tania White :
@Chris Grizzaffi what was the solution?
Tania, my partner in the second one ended up putting the home in his name until I get the other home leased and complete my refi. My lender stated that once the first refi was done and the home leased, they'll be able to continue onto the second. I was very open and transparent with them.
I had one or two people offering advise that it was risky to allow him to put this second one in his name on the deed. I discussed this candidly with him. I've known him for ages, and he is not interested in the real estate. He is willing to work with me as we learn it all together. he wants it to be a win-win, so once we get this one done, we can just move on to the next.
There are a couple people who mentioned refis without a DTI component, and I am intrigued by that moving forward as well. These are my first two, but this endeavor is something I want to RUN with, and I would love nothing more to focus on following finding great deals rather than worrying about my DTI.
Originally posted by @Alex Bekeza :
@Chris Grizzaffi. Did you find a lender who would REFI without any DTI Requirements?
All the best,
Alex, thanks for the inquiry. Currently, we are moving forward with the refi with my current lender. I am self-employed, so I can imagine this will continue to manifest itself! How do rates vary from conventional investor rates on these kinds of loans?