Hi, my husband is a doctor and I'm a stay at home mom. Now that our kids are in school I'd like to get into real estate. Ideally I would have this as "my" business so as to show my own income for financing purposes but without an income to show to get started, I'm wondering what the best way to structure finance is so I can begin showing the rental income as my income going forward. I'd love to be able to get 4 mortgages in his name and 4 in mine but without my own income to start, I'm not sure how where to start. Thanks for the help!
Real Estate Broker · DFW · Member since 2015 · 350 posts · 270 votes
4y
You're going to have to utilize his income to get loans... If you want 4 in your name try using him as a co-signor? I'd get connected with a good broker or lender and your area and talk through options.
Lender · Columbus, OH · Member since 2020 · 202 posts · 214 votes
4y
Hi Audrey! This is how I initially started in real estate and I quickly saw the value in becoming a lender. It depends on what you are looking to do in real estate. You can start flipping with hard money to get your income up. Once you get a few good flips under your belt you may have enough cash to retain a couple of your acquisitions for rental income. You can also finance the deals with only your husband on the mortgage and you included on the deed. Conventional financing allows up to 10 homes for a borrower so that's 9 rental properties if you have a primary home. DSCR is a great option but a lot of time the lenders require some experience.
You can always start with hard money they aren't that much more expensive than traditional bank financing. Then once you get some properties banks will be able to take your rental income and use that in your DTI.
If your husband is one bored with your real estate journey I would absolutely use his job as leverage to get started.
If you survived being a stay at home mom then real estate should be a piece of cake. GOOD LUCK
Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes
4y
Hi @Audrey Dye - As others have said, the Debt Service Coverage Ratio loan might make sense for you. As far as pros, you only need a credit score above 600, enough money to cover 20% down plus closing costs, and for the property you are buying to have a projected rental income (as determined by an appraiser) that at least equals, if not exceeds, the projected mortgage payment. No personal income/employment required. As far as cons, these loans do have higher interest rates (like at least 1% higher if not more than conventional) and higher origination costs. These costs will eat into your cash flow and ROI, but if you find the right property it's a great option.
I'd avoid having your husband co-sign if you are looking to build a large real estate portfolio. If you are going to go the conventional loan route then just have him be on the loan (you can both be on title). That way when you do become 'bankable' for conventional loans, you personally have more wiggle room both from a Debt-to-Income ratio perspective (bc the loans in his name aren't counted against you) and from a loan limit perspective (can only have 10 conventional).
Feel free to reach out with more questions! Good luck!