Income to Debt Ratio too high

[Matthew T.]

So I recently purchased my first investor property (single family home) which was really exciting, we got it rented quickly and the numbers are all where we want. When we had been talking to the bank originally they made it sound like we could do 4-5 investor loans, but now we ran into a wall after our first purchase. We have enough money to do a 20% downpayment on a $40K property, but our income to debt ratio is too high. About 53% and the bank wants it to be around 45% or less. Our income is not very high, around $20K a year, we are self employed and deducted everything we could. We have no debt except our rental property, even our residence is paid off with about $150K in equity. Next year we are going to deduct less, plus our income will be higher in general. We were hoping to buy 1, maybe 2 more properties this year and 2-3 again next year. My business takes a lot of time and I didn't really want to do fixer uppers or flips, I had been planning on only doing ready to go houses or homes that need little repairs, but I suppose I can change my mind on that if thats the best option.

What advice do you guys have for getting financing? Perhaps a HELOC on our personal house, or will that also fall into the income to debt problem. Id really like to buy a second rental property this year, but it seems like traditional financing isn't going to be an option.

Thanks

[Lee Ripma]

@Matthew T. Pull from your HELOC and start getting commercial loans. They don’t care about DTI. Network with small local banks!