Question Regarding using lease for funding

[Michael Oliver]

Long story short-ish:

I have a current mortgage and my DTI is too high, but the thing is an amazing STR. Would do 5k a year easily. Has a flavor for all seasons.

But I have to live there.  Im trying to move out so it can make that but I'm just throwing money away living there. 

I have 325k left of my VA Loan. I found a duplex for 318k but can't get approved in the lending side. Many people have talked about getting a lease for the STR. My question is does that lease need to be valid? Or can it be fabricated? Will the lender investigate it? The STR will produce way more, but it's not accepted. I feel like I may be cheating the system by using a fake lease, but the fake lease would just be 1/2 of what the real income would produce.

[Zack Karp]

@Michael Oliver creating a fake lease is mortgage fraud.  DO NOT do that.

But, here's the workaround. Create a LLC, and a separate bank account for the LLC. Rent the property to your LLC using a 1 year lease and an appropriate monthly rent amount. Then your LLC can "sublet" it to STR tenants. The STR tenants will pay your LLC into that bank account. Then just make sure you actually have the LLC pay you monthly rent from that account to match the lease amount. Do not skip any steps, and this solves your STR income issue.

Also, in order to use rental income to qualify for a VA loan, you need to document prior landlord experience. OR, you can hire a property manager prior to closing and that satisfies the landlord experience.

TYFYS and best of luck!