To buy or not to buy? (Link to numbers included)

[Dan Wynn]

I have a quad under contract right now that looks great on paper! See link below! I am hesitant to pull the trigger on this one because of a few factors:

1.MFs on street- Quad is in a C area but this particular street is lined with other du/tri/quadplexes in varying conditions. About 5/20 MFs are boarded up for various reasons. The quad next door to mine has fire damage and has been boreded up for about 5 mos, there are also duplexes within sight that are boarded up due to water damage. 

2. Increasing personal DTI- I am using conventional financing (4.25%, 30yr fx, 5% down) in my name in order to buy this quad. Most of my capital is currently tied up in the rehab of another quad. The acquisition of this quad will increase my DTI. My focus for 2017-2018 is to switch from buy and hold to purely flipping and learning apartment syndication. This will allow me to build capital then move into larger (25+) MF apartment homes. I am worried that increasing DTI will make it more difficult to secure loans in the future.

Any advice? 

Link to numbers below:

https://www.biggerpockets.com/calculators/shared/3...

Thanks in advance,

 -Dan

[Matthew Schroeder]

Although you didn't ask specifically about it, one question about the financing which may be important for you.

Since this is a "non-owner occupant, investment property" (i.e. this is not your primary residence and you will not be residing there), do you have a high degree of certainty that you will be able to get 30-year fixed rate loan with 5% down?

As you know, "non-owner occupant, investment properties" typically have different terms and conditions than primary residences.  For investment properties, most financial institutions are only willing to lend with LTVs in the 75-80% range and amortization schedules are often only 15-20 years.

Obviously, the numbers will change materially based on the type & terms of the financing.

Good luck!