First Time Rental/House Hack

[Cody Wilson]

Hi All!

New forum member here, been spending a lot of time reading as a guest but finally deciding to make my first post as me and my partner are looking to relocate from Pittsburgh to Charleston SC. She is a high school teacher and I am an electrical engineer.

Chasing some first time rental/house hack advise…

An opportunity has presented itself in Charleston SC (I went to college at The Citadel for two years) and it has sparked both me and my girlfriends desire to relocate to the area. We have narrowed our search 2-3+ bedroom units/or duplex either set up with a mother-in-law suite or some other form of detached living from the main house to allow us to afford downtown living. The upper end of our budget is around $700,000 for the type of home we are looking for. Projected rental income would be in the $2-3000 range depending on number of beds.

Doing some research, it does not appear I will be able to have lender factor in the projected rental income when calculating the DTI. With 20% down at our max budget of $700,000 our DTI will be in the 33% range.

The short term goal is to live in this house for 2 years, build a landlord history and eventually purchase another house in the area and use the original for supplemental income. Currently been living in our Pittsburgh house I purchased 1 year ago and have 30% of it paid off. May rent it to a family member after we relocate or sell.

Questions: Will I be able to secure a conventional mortgage with the 33% DTI? Have heard from some it is possible with my credit score as long as I have 6 months of reserves. If I keep my Pittsburgh house and rent to a family member my DTI will be 41%, is that possible to get a conventional mortgage for?

Is this too ambitious for a first time investment? By itself it would only carry a 33% DTI, but we plan on beating it down to around 15% after rental income.