Debt To Income Ratio Too High

[Kevin Guyden]

Hi BP family, I am new to BP(Both the podcasts and websites/forums) and I am a fairly new investor from the Houston Texas area. I bought my first Single Family Rental in 2014 and sold it In October of this year. It was a great experience and I am looking to acquire more properties whether that be Single family or Multifamily or both. The problem that I currently keep running into is obtaining financing from banks and hard money lenders. Although my credit is good, my Debt to Income ratio is too high at the moment. The debts I have are my mortgage and car loan. My home is new and I have not lived in it a long time so there is very little equity in it. So BP family, If you have gone through this at some point in your investing career, how did get around this and continue to acquire properties?

[Chris Mason]

Originally posted by @Kevin Guyden:

Hi BP family,

I am new to BP(Both the podcasts and websites/forums) and I am a fairly new investor from the Houston Texas area. I bought my first Single Family Rental in 2014 and sold it In October of this year. It was a great experience and I am looking to acquire more properties whether that be Single family or Multifamily or both.

The problem that I currently keep running into is obtaining financing from banks and hard money lenders. Although my credit is good, my Debt to Income ratio is too high at the moment. The debts I have are my mortgage and car loan. My home is new and I have not lived in it a long time so there is very little equity in it.

So BP family, If you have gone through this at some point in your investing career, how did get around this and continue to acquire properties?

Assuming you got that recent primary home loan more recently than the car, DTI shouldn't be an issue. Overlays are likely at play. Keep dialing for dollars, find someone REI friendly that knows how to count the rental income from the cashflow positive real estate you are purchasing.

If you got the personal home loan and then got the car loan, by contrast, it's possible that the car is indeed trashing your DTI. Cars are depreciating assets. Financed depreciating assets are a luxury item, not a necessity. Borrowing money to buy something known to go down in value 99% of the time is probably one of the larger scams visited upon the American people.