Debt / Income Ratio when factoring in rentals

[Sam K.]

I have a high W2 income and several rental properties. The rental properties range from slightly cash flow positive to slightly negative. I plan to continue acquiring properties.

I'm unclear about how lenders take rental properties into consideration when calculating Debt / Income ratios. It seems to me as you add properties that are cash flow neutral, your Debt / Income ratio will continue to go up and up, even though your ability to pay will not decrease. 

However, I've read online something that suggested only the net cash flow from a rental get added as a debt / income. Is this the case? Or does both the monthly mortgage amounts and the rental incomes get added separately as debt / income?

As a contrived example, I make $100,000 per year. The home I live in costs $20,000 a year in taxes, mortgage, and insurance. I have a home that makes $11,000 in rent and costs $10,000 a year in taxes, mortgage, and insurance. If all debt / income is added up individually, I'd have Debt = $20,000 + $10,000, Income = $100,000 + $11,000, Debt / Income = $30,000 / $111,000 = 27%. If for the rental only the the net amount is counting as debt, then I'd have Debt = $20,000, Income = $100,000 + $1,000, Debt / Income = $20,000 / $101,000 = 19%.

Thanks for any insight.