Advice needed to get started in real estate investments

[Melinda Godfrey]

We are trying to invest in real estate but keep hitting a wall when it comes to lenders. Please help! Here’s our story…
My husband is self employed, we have 2 businesses & I work for a company. As far as our businesses, we try to make the businesses look like a loss or show little income, for tax purposes.
We have $200k in equity in our home, our restaurant is paid off, we have money in the stock market, great credit scores and a large sum of money in savings. We pay all credit cards off every month and the only loan we have is our mortgage on our home.
The problem is that every time we apply for a loan to invest in property, we’re told that self-employment is not ideal and that our debt to credit ratio prevents us from getting a loan. Specifically, we were recently told “if a lender could consider the financial assets of the borrowers to offset the high debt ratios, that would make sense, however that’s not part of the ATR requirements”. 
I feel defeated. I have applied with smaller local banks, mortgage lenders, boffer banks, and I seem to get the same response. Most of them don’t even look at our application or any supporting documents, they see self employed and say no. 
Does anyone have any advice or know any way around the ATR requirements of our debt to credit ratio exceeding 43%? Apparently it doesn’t matter how much we have in equity or in the bank because they can only consider my income because my husband’s self employed, and we, like most people, write off as much as possible, which results in our business showing a loss or low profit. 
I would appreciate any help or advice!

[Sherry Patterson]

So many things you could do to get started! I just wrote about this on another forum this morning if you want to look that up for ideas. This one is a bit different since it is specific to money/loans. If you have 2 years of taxes that is what lenders need. So I understand not wanting to show profit due to taxes however, this is costing you more by not being able to invest. Start with 2021 taxes and suck it up and show a profit and pay the taxes. It doesn't have to be huge but it needs to be over $50k. They will average this with 2020 and hopefully this will help. Do this again in 2022 so that you have 2 years of profit to show and then lenders will be lined up. In the mean time you can get creative and use one of your businesses to purchase property. The interest rate may be a bit higher but you can get a portfolio or commercial loan. You can get a loan that is just based on the asset and not on you. You can put 40% down and get a non-recourse loan. You can ask your friends/family to loan you money out of their 401k/IRA and pay them more interest then they are currently getting. You can get a partner. If you have a partner that has good DTI and credit and you have the cash it is a good trade off. You can buy more together. It is better to have a percentage of something then all of nothing. Once you file this years taxes if that is not enough averaged with 2020 then you can buy with a 12 month hard money loan. This will probably cost 3% and have a high interest rate. But you can do this for a year while you wait to file 2022. Once that is filed and you have 2 years of taxes then you can refi out at a good rate and you have at least had a property for the past year that maybe didn't make any money due to the interest but you were building something and increasing equity. Or refi your restaurant and home and pay cash until you get your taxes in order then refi what you bought. Use the money now in a passive investment deal, again a part of something much bigger than what you can buy alone. Use some of my other strategies listed in my other post to build some cash flow with the cash you have while you wait out the taxes situation. The main goal is to just get started! Happy investing!