Securing lending as a business owner? Help needed!

[Audrey Spina]

HI BP Members!

I currently own a retail business in Brooklyn NY and am ready to expand my investments into real estate. OOS multi-family is the goal. I'd like to take the first step of getting an idea of what I could qualify for except it has just occurred to me that having a very good and very creative accountant has also left my income (on paper) looking a bit sad, and not quite an accurate representation. 

I am an S-Corp and pay myself a small salary of $40K but make the lions share of my profits through my dividends. I have had lots of deductions and thus has cut deeply into my financial "portrait." I do however have excellent credit (780) and 6 figures in the bank. 

To get to the point- Are lenders taking your taxes as the most important part of your financial picture? This year I will be bumping up my salary to take this into account, but wondering if I should hold off on trying to get pre-qualified because my income currently shows so low. Otherwise do I just see what I can get qualified for based on my measly earnings but excellent credit and liquidity? Thanks in advance! 

Also I should note, in case this makes a difference, I have not chosen a particular market for investment yet,  I am finding that to be my biggest challenge!

[Basit Siddiqi]

@Audrey Spina

lender's will look at your full tax return and not just the salary that the S-corp pays to you. Does your S-corp show income after it pays you your salary? If it does - the lenders will count that as income earned. 

Lenders look at several things such as DTI, Cash-required to close, and credit score to see if you will qualify for a loan.

DTI(Debt-to-Income) - Banks want to see that the income you earn can pay off your current monthly obligations plus the new mortgage you will acquire. I see 36% and 45% DTI's are okay to have to qualify.

This is the area that may impact you the most since you indicated you don't have much taxable income. 
If you rent your personal residence; a large monthly rent can affect you. Brooklyn rent is high!
Also - large monthly credit card debt can impact you. If you have some - you may want to consider paying it off.

Cash-required to close - This area doesn't seem like you will have any trouble since you have money in the bank

Credit score - again this area doesn't seem like it will impact you since you have excellent credit.

You may want to consider speaking with some lenders. Ultimately - they are the ones who will have the final say.