Is Schedule E the Gospel for Lenders ?

[Jay P.]

Does anyone have any advice on what lenders prefer to see in a schedule e ?

Do too many write-offs look bad?

Is all they want to see is income?

Are there any other documents or pursuasion to provide to lenders to show good portfolio numbers? 

[Ramona Hall]

We do use Schedule E as the deciding factor when calculating total debt to income.

Sometimes we can exclude a one time improvement that kills the bottom line. Say a new roof.  That is not an expense that comes up every year.

The other strategy in schedule E net profit or loss is that a lender can add back depreciation expense. So let's say your net loss that year was $3000 and you took $5000 in depreciation. We can actually show a $2000 profit for that year. Depreciation is an unrealized loss.  If you have the choice to take the expense or depreciate. It's "sometimes" better to depreciate if your goal is to finance a few more houses in the coming year.

I hope this helps.

Ramona