What is BIGGEST hurdle you are facing right now?

Question

My biggest challenge is my DTI. This problem caught up to me faster than I ever thought it would! After acquiring a few properties over a couple of years, my "debts" quickly outpaced my W2 salary. I put that in quotation marks because I don't feel the weight of this debt at all. This debt was used to purchase these cash-flowing rental properties and I have a decent reserve. HOWEVER, banks see this and DO NOT like it (especially in today's lending environment). Most lenders demand a 2-year history at a minimum to count this rental income towards my DTI.

My investments are pretty young. I probably have another year of "waiting" before most banks will consider these assets to be stabilized.

I could just play the waiting game, but why pass up good deals in the meantime? Is my best bet to use asset-based loans? I am a little hesitant because rates on these loans seem to be in the 8-10% interest rate range. It sounds high...but it may be my only way if I want to continue to buy-and-hold additional properties.

That is currently my biggest hurdle. What is the biggest thing holding you back RIGHT NOW? And what are you doing about it?

-John Williams

Investor from Clarksville, TN

Account Closed · Answer

@John Williams

Deciding how much cash to have available in case all h*** breaks loose in the winter with COVID and tenants not paying rent. The more cash I keep, the slower I can grow.

In fact, Trump was just speaking today about the next stimulus package saying he wants to keep people from getting evicted. Only time will tell what that means.

Emil Pinlac · Answer

Hey @John Williams! First of all - congrats on crushing the game with the purchase of a couple of properties! I'm honestly hoping to get to your level in the next few years with my own real estate investing journey. To your current challenge - could you be more specific as to what you mean by asset-based loans? Did you mean like taking out 401(k), IRA, or other retirement account loans? Or something else? For me, I think my biggest challenge IS just playing the waiting game. haha. I got the real estate bug just this past March - but I have been really trying to nail down my entrance strategy into RE while saving as much as I can and learning as much as I can in the meantime. I've set a goal for myself to really begin to purchase in the next 1.5 - 2 years., to ensure I can still (hopefully) get some of these low-interest rates and to save as much for a downpayment and reserves. It's so tempting to just jump the gun and buy now, however, it just wouldn't make sense.. especially with the uncertainty of the current pandemic and my lack of any huge emergency savings.