Rental Income portfolio building

[Philip Katz]

Most success stories here are from people who buy properties that need some work, unlocking value. I'm curious, are there any people here who manage to build a portfolio WITHOUT any rehab work at all? I'm in that spot because I have no skills or time for any kind of rehab work. 

But when I look around for rental property, I have a credit-limited amount I can borrow - which is great for my first rental property. But that's it. How do I grow from there if I can't borrow anymore? 

I'm very eager to follow success stories of others like me - people passively managing real-estate portfolios.

[Justin R.]

Philip Katz You're going to have a hard time if you plan to "compete with everyone else on the market" - that means you're paying retail. Not impossible, but difficult.

As to the DTI and maximum amount you can borrow, you may be confused. Many (most? All?) lenders will ignore all rental debt and income to calculate your personal DTI. Then, they'll look at your total rental income (based on leases you give them and your tax returns), take a percentage of that, then subtract PITI to come up with your net rental income. If it's positive, it improves your DTI. If negative, it hurts your DTI.

This started happening for me after some amount of properties (I'm not sure how many). Point being, after you're a proven property investor, each property that throws off free cash flow improves your DTI, and makes the next mortgage easier.