Operating two STRs for <2 years - using their LTR rents for DTI?

[Brenden M.]

Hi BP members. As the title states, I've been operating two STRs for about 8 months now. I am interested in buying another property, but I want to make sure I am understanding any limitations I may run into as a result of my current DTI situation. My understanding is that I will not be able to use the STR income for those units until they've been on my tax returns for 2 years? If that's the case, would I be able to substitute their market long-term rents as part of my income when the lender checks my DTI?

My appraisal report lists the appraiser's opinion of each unit's market rent -- would a lender use those without issue? Or, since I believe the rents were significantly undervalued 9 months ago, and may be even more so in today's market, would they consider an in-house/updated estimate of market rents. Thank you. 

[Lucas Martinez]

You should be able to use long term rental estimates in your DTI. I believe most lenders would require those estimates to come from an appraiser, however. Another option you should look into is DSCR loans. Many lenders will work with 6 months of seasoning, so you should be fine with 8 months of financials. May pay a higher rate, but you can probably get more equity out faster going this route.