Do rental losses limit borrowing power?

2 Replies

Do rental losses limit future borrowing power for mortgages and what is the work around that? Forming an S-Corp?

@Patrick J. if the losses are due to depreciation a good banker will adjust for that. But not all banks are that savvy and may actually ding you for depreciation losses. If they are real net losses as @Wayne Brooks says then yes, it lowers your income and ability to repay.

Putting it into an entity doesn't change your credit worthiness but it can mean you need a more expensive commercial loan. That is an entity vs in your own name, If it is in an LLC already then no change. You already need a commercial loan.