High salary and 300k in cash but can’t get financing.

[Tyler Anderson]

Foiled by student debt again!

I’m a young professional with a high salary job, good credit score, 50K saved up for investing, but high student loan balance (due to be forgiven in 5 years through PSLF, so I DO NOT want to pay off more than I need to).

Our home is in a 15yr fixed mortgage so it’s a pretty high monthly payment.

The combination of that mortgage and my student debt have shut me down when trying to get a 2nd home loan. I really want to get into short term rentals and have spent all year reading and researching and networking. I feel ready to pounce and have ID'd a good market. But I can't get a loan! Since all govt. loans are in deferment, the banks are using a default 1% rule when calculating DTI. This makes my DTI super high.

Still can’t find financing even though we have a business partner willing to put up 250K to get things rolling. So we could do like a 30-50% down payment on something but I’ve tried multiple portfolio lenders and they all string me along for 1-2 months before telling me sorry no dice.

Any tips on where to look for financing?

[Tim Delaney]

@Tyler Anderson if you can find a deal that cash flows as an LTR then you may find a DSCR lender that is more willing to take a chance on a first time investor. After you get the property you could always switch to STR as long as there isn't a clause in your loan docs specifically preventing it.

Another alternative is to have your investor make the actual purchase with a conventional mortgage and then you two can have a handshake deal to share profits. Or if you want to make it more officially, the investor can hire you to manage the STR. That would have the added benefit of giving you experience needed for your next loan. Another option would be to let the investor purchase in their name and then do a quit claim deed into your partnership- the only risk with that is the due on sale clause in the mortgage.