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Updated over 9 years ago on . Most recent reply

User Stats

11
Posts
2
Votes
Todd Harvey
  • Investor
  • Berkeley, CA
2
Votes |
11
Posts

How is DTI measured when you spent a lot on improvements?

Todd Harvey
  • Investor
  • Berkeley, CA
Posted

I'm hoping to be able to either get a cash withdraw refinance or a HELOC so I can buy another building, but I have crappy DTI ratio if all my improvements are held against me.

I just spent ~70k in improvements for my 4-plex that I live in.

Based on my professional earned income and 75% of the rental value, it looks like I can qualify for a loan to refinance the place if I spent nothing on improving the property this last year.  However, since a significant portion of the income went into improvements on the property (hardwood floor, paint, new decks, new kitchen, etc), my fear is that when I turn in my tax return, it will look like I make less money because of the improvements.  

Do I have to wait a couple more years and not put money into my properties to be able to show 2 years of higher income so I can have a good enough DTI to get a loan?

When looking at income, are improvements subtracted from your income like maintenance?

Thanks so much!

Todd Harvey

Berkeley, California

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