Buying without counting towards DTI

[Rick Albert]

Hello!

I am wondering what the work around is to purchase properties without it counting towards my DTI. Because of how my Schedule E is with all of the write offs, it throws off what I can qualify for.

One thought I had was start purchasing under an LLC and have the LLC take out the loan. I'm getting conflicting information on whether or not it will work because I would the sole owner of said LLC.

Any advice would be appreciated. I buy all over the United States and plan on buying at least 2-4 more over the next 12 months.

Thanks!

[Robin Simon]

Quote from @Rick Albert:

Hello!

I am wondering what the work around is to purchase properties without it counting towards my DTI. Because of how my Schedule E is with all of the write offs, it throws off what I can qualify for.

One thought I had was start purchasing under an LLC and have the LLC take out the loan. I'm getting conflicting information on whether or not it will work because I would the sole owner of said LLC.

Any advice would be appreciated. I buy all over the United States and plan on buying at least 2-4 more over the next 12 months.

Thanks!

You should look into DSCR Loans - many investors like yourself typically move to this loan product once they max out with DTI/qualifying conventionally - a bit higher in rate than conventional mortgages - but no DTI ratio or tax returns/income verification makes a much easier qualification process and LLCs are 100% ok (even as sole owner) and actually often preferred.

PS - published a 10-part article series here on BP last year on everything you'd want to know on these loan types - sharing links below, hope it can help!

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

DSCR Loans: How To Use Pro Strategies To Save More And Make More

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

8 More Commonly Asked Questions and Answers to DSCR Loans

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What Documents Do You Need for a DSCR Loan?

https://www.biggerpockets.com/blog/what-documents-do-you-nee...

BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

Short-Term Rental Loans: What Are the Options and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/short-term-rental-loans-a...

DSCR Loans: Terms to Know When Working With These Popular Rental Loan

https://www.biggerpockets.com/blog/dscr-loans-terms-to-know

What’s Next For DSCR Loans? Updates For 2024 and Beyond

https://www.biggerpockets.com/blog/what-is-coming-in-2024-fo...