Mortgage debt, how much too much?

Question

We recently used a HELOC to purchase a single family home and a duplex. My question is, at what point does the amount of debt we've taken on start to prevent us from taking on additional mortgages?

Andrew Postell · Answer

@Eric Fietz if your debt is working for you, as in on an income producing property - then it's "good" debt.  If your debt is not working for you, like a car loan - then it would be debt that would count against you.  At least, in theory this is how it should work.  Not every lender will look at it like this though. So we need to work with lenders that will use that rental income to help us qualify.  Some loans will work differently too.  Not all loans are the same.  Not all lenders are equal.  Lean on other investors to find out which lenders will help you.  Hope all of this makes sense.

Kerry Baird · Answer

For me, the first 1 to 4 properties were pretty easy.  Getting and keeping the 720 FICO and 6 months reserves for all of the properties, and bank statements, mortgage, insurance statements...well, jumping through those hoops made it onerous for me to keep getting conventional mortgages.  I moved to DSCR mortgages and haven't looked back.

Theresa Harris · Answer

Talk to your bank as they are in the best position to answer that question.

Jake Wiley · Answer

Unfortunately quicker than you'd hope.   As you grow your portfolio it simply gets harder to find qualify for conventional loans

Was going to type a really long-winded version of the journey - But here's an article that does a great job of things.

You'll need to pivot to a broker/banker that specializes in this type of lending that can help you keep moving.

Keep going though, even when you start hearing the no's, there is a path forward.