Offer accepted on first property, working on financing second.

[Jeff Arndt]

Help BP!

Got an offer accepted on a 3-unit which I will owner occupy on an FHA loan. The PITI should run about $1600/mo.

My only other debt is my student loans which will come due in June. Those payments should be about $900/mo. (I thought money grew on trees in college).

So my debt/income ratio should be ~2100/5533=38%

My question is will a conventional lender ever consider me for another buy and hold property? What if I got part time work that earned me another $1000 a month?

Thanks!

[David Beard]

Until you have a couple of years of landlording experience, you'll doubtful be able to get any of the rental income (on your 3-plex or a new prospect property) to count, for conventional. Your max debt ratio is 45% for conventional with good credt, and your next one will be straight investment property (since you won't be living in it) and will require 20-30% down.

They would count income from a part time job only after you've been in the job for a year, some even want two years.

Once you have the two years of landlord experience, they'll count the rental income, and as long as your properties have positive Net Cash Flow (NOI minus P&I)--you shouldn't buy any that don't-- then new purchases will actually improve your ratio, as positive NCF goes into the income portion of the DTI ratio at that point.

A local bank or credit union may cut you some slack and let you count rental income prior to having the two years of experience.