Not qualified for conventional financing.

[Zack Scharlepp]

I have been interested in real estate investment for 9 plus years, but have never been in a position financially to make it work. 

This year I decided I was going to make the jump into real estate investing and met with my local bank. Much to my surprise, I was informed that my debt to income ratio is to high and I do not qualify for financing. I have alot of student loans which is killing me. 

My financial situation is as follows:

Income:

$7,916.66    My gross monthly income:

$5,000         My wife's gross monthly income (This is also an issue as my wife owns her own business and therefore her reported income is lower due to allowable deductions and write-offs that do not truly effect her income).

$600            Rental income

$13,516       Total gross income

Debt

$1,531        Mortgage on primary residence

$421          Mortgage on rental property 

$1,311       Combined monthly car payments

$900        Combined student loan payments

$4163     Total monthly debt payments

I am trying to buy an investment property(s) for long term hold, and am looking at properties in the $70,000-$130,000 range in Tallahassee, Florida. I know that I have the income to cover the mortgage on these properties even if vacant, as I have been aggressively attacking my debt by paying an extra $5,000 per month on principal payments on my car loans. 

Other than continuing to pay off my debt to make my debt to income more attractive (if i continue current pay off schedule I will free up an additional $460 per month in May, and another 560 in June 2016) are there other avenues for me to get financing? 

While I can continue to wait and pay off debt, I am fearful that by doing so I am missing a GREAT time to buy due to historically low interest rates, in addition to recovering home prices. (Tallahassee appears to have bottomed out in 2011-2012, and has shown 2-3% gains over the last two years and all signs point to a continued recovery. In addition, the percentage of distressed properties making up the overall inventory has dropped significantly over the last two year, making great deals more scarce. 

I appreciate any advice, tips, or leads in this area. Thanks in advance. 

[Siye Baker]

hello

 I would get rid of the cars:

Exchange them for a couple inexpensive cars with no payments. This might mean driving less than desirable cars, but you would be reducing your debt load by a third. If this doesn't suffice, continue chugging away at revolving debt. Don't close any accounts or have charge-offs. If your credit score is under 720- ask someone who has a better credit score to allow you to piggyback off of theirs(they authorize you on one of their accounts). Not advice, only what has worked for me. Hope this helps, good luck

Sebastian