How to take down this deal with tons of equity (But high % rates)

[James Bolduc]

Hello everyone, I have a question for you all and would really appreciate your advice/recommendations. 

I am still a rookie, starting off my real estate investing journey. Hopefully, I am stumbling on something that you more experienced investors can help provide some insight to and help me find a solution to. 

I have a property under contract for 400k. It is a new build 2017 and rent ready. Zillow Zestimate is 560k. It's in a great, new neighborhood. 

I tried to get the owner to seller finance but he was not interested. 

Initially, my plan was to simply get into the property with hard/private money and then refinance out to a conventional loan. So I started talks with a mortgage broker to get a feel for how numbers would look once I refinanced and..... have now hit a hard stop on this process. I need help figuring out how I can take down this deal. 

I am currently a resident physician making 56k, 1.5 years from finishing residency. I have a personal residence and almost 500k in medical school debt. I am married to a teacher, 50k on her end. My high DTI throws a wrench into obtaining conventional financing/refinancing but not impossible.

Interest rates I've been quoted are in the 7-8%, possibly a bit higher. 

If I put 15% down (60k). Finance 340k At these interest rates, the PITI would roughly be in the 3000-3200 range which is conservatively what the rental market in this area can cover. I don't necessarily mind not cash flowing but obviously not ideal situation. My concern is that the margins are basically non-existent, no room for ANY reserves. Rent would go strictly to paying rent. The property is pretty new, SHOULD be low maintenance, but still concerning.

I'm not too worried about hard/private money rates bc they would be a short term solution just to get into the property. If I was to find a hard money lender who can allow lower down payment (at this point in my life, 60k is a lot) then refinancing a higher mortgage balance shoots the PITI to 3500-3800 which may be at the very top or even outside what the rental market for this property can bring in.

I really want to close this deal and keep it as a long-term rental but I need some help on how I can make this work. The only way to comfortably make this property cash flow with some margin is by increasing the down payment. In the future, of course I would plan on refinancing out to a lower rate assuming they come back down and cash flowing should be much much easier. 

I don't want to, but as a back up, I can wholesale this deal. But on the back end, I'm wondering how anyone could make this work with such high interest rates? If anyone wants to get conventional financing after they pay cash, the property would be hard to cash flow at the higher sale price that would include my wholesale fee. 

What do you guys recommend? All advice is welcomed!