Buying A Second Property When You Have A Lot of Debt

[Ashtynn Baltimore]

Hello! 
Newbie here. I want to buy a fourplex in California or out of state, however, am afraid that I won’t qualify for financing because last year I bought 1/3 of a $1.4 million property with family. The idea was to rent it out, however, some family members got cold feet on renting it. So, I pay 1/3 of the mortgage. We put 20% down. I also have significant student loan debt from graduate school. 

I’d like to strike out of my own and find a fourplex or higher in or out of state. I’m speaking with the our loan officer, he indicated it will be difficult because the debt load from My first investment in CA isn’t split three ways according to underwriters. I’m evaluated as if I carry the entire debt load by myself. 

Any advice you all could provide on financing options for an additional property would be great! Note: I work full time still. 

Thank you in advance and happy to connect with anyone interested in getting help looking for deals or doing anything else (learning as much as I can!).

[Filipe Pereira]

Hi @Ashtynn Baltimore, I have a few ideas, but they aren't that rosy or appealing I imagine. 

1. Sell the 1.4m property. Sounds like a huge liability instead of an asset.

2. Get a partner that is bankable for property #2.

3. Pay off your debt before getting into another property to lower your DTI.

4. Find another market that you can cashflow in. Your LO said it would be tough to get another mortgage because of your debt - but what were his / her assumptions in the amount of a mortgage you were trying to get? You can get a 5-6 unit building in CT for 300-400K right now - if you put down 100K, that's a 200-300K loan, is that doable for you? 

5. Figure out a way to increase your income. (I know, easier said than done!)