This is the second time my loan fell through. What can I do?

[Len H.]

My funding fell through for the second time...grrrr! I need help!!

Where do I start... I currently have one rental property under my belt. I bought a house for $3k and fully rehabbed it (pictures upon request lol). I used cash, credit; basically anything I could to get the place completed. It rents for $800 a month. I just closed on my first refinance (HELOC). Cruising right along through my first BRRRR, I come across the "repeat" step and now I'm stuck.

A friend of the family has 2 properties for sale they just want rid of. A duplex ($40k) and a triplex ($60k). The number are...

Duplex rents:           Triplex rents

$850 3/1                   $800 2/1

$465 1/1.                  $700 1/1

                                   $410 Eff

$3225 total rents--and well under market value. Even after expenses, there is  a lot of cash flow. The seller isn't willing to do owner financing.

I applied for a loan through a bank. Then, I applied with a mortgage broker. I was turned down from both. I have great credit and decent W2 income ($75-$80k and a cash flowing single family). Plus, I have the down payment and closing costs needed for both properties because of the HELOC.

The bank ran my credit, then told me my DTI was to high at 50%. Originally, they said they could use the rents from the duplex and triplex as part of my income. Then, when I was denied the loans, they said they could NOT use the rents from the duplex and triplex as income (even though I asked them before I started the process). They also told me, I don't have enough cash reserves...even though I show them my 401k, crypto holdings and some cash. Which in total, exceeds 6 months worth of reserves...but not all cash.

The broker tells me he can use the income from the rents. The broker runs my credit for a conventional loan and said my DTI was to high ( which I already knew). Then he tried a commercial loan. He shopped around then came back and said, none of their partner would loan under $150k. So, here I am. My credit keeps getting hit with inquiries and I can't get this loan closed to save my life! I know I have a great deal in these 2 properties.

So my question is... What can I do? I'm sort of exhausted with the whole process, but I can't give up! Any advice or a referral would be greatly appreciated! Hell, I'll even take a lucky lottery number at this point lol.

[Tim Johnson]

Those small loan amounts are your problem most lenders don't want to lend below 75k. 

Find a small local credit union or bank ask for the commercial department.