First SFR. Now what?

[Kyle Knapton]

First time asking a question on here. I found bigger pockets after I purchased my first SFR to start my buy and hold strategy.

Everything is going great with the property and it makes good money. I paid all cash for it less than a year ago thinking I would have no issue refinancing to cash out and find my second investment. However that is not the case.

It seems banks are unwilling to count the rental income in my debt to income ratio. This is putting me above their underwriting guidelines. Any suggestions other than sit and wait? I have spoken with national banks, local banks, and mortgage brokers.

As a side note, I beleive the property taxes in my state are the highest in the country but the rents are high as well.

To go along with the fact I am having trouble refinancing, one broker mentioned not listing many write offs in my taxes because they will be looking at the adjusted rental income and not the gross. I spent a lot of money fixing the place up so I would be able to show a fat loss on my taxes. Would they not take this into consideration?

Any suggestions would be much appreciated!

[Ned Carey]

This is all lender dependent. You will have the best luck with local banks that hold their own loans (portfolio lenders)

One thing to consider, if you capitalize the repairs you don't deduct it this year so your income will show as higher. However you have a higher basis for depreciation in future years. This may allow you to get financing now and save more of future taxes. Talk to your CPA.

Also some lenders are smart enough to realize you depreciation is a paper loss and count more income but again that is lender dependent. Good luck - Ned