Debt to Income Ratio :: Question

[Ladd Austere]

So I'm quitting my job next month. Will not have a W2 anymore. Intend to take a nice nest egg of cash and turn full time to real estate investing over next two or three years, likely focused on SFR and small multifamily. I'm concerned that without a job, and currently with only 30K NOI on rental properties, that I won't qualify for loans on investment properties. For example, I just got turned down for conventional loan because of DTI on the following:

- 300K purchase price on turn-key SFR

- offered 60K+ down payment

- 800+ credit score

- nice looking bank account

- experience buying and selling investment properties

- no job and only 30K/yr NOI on rentals

- all around good guy  :D

An extra point or point and half might be okay, but 3-4+ extra points doesn't make sense. 

Anyone have any thoughts on how to get around this DTI issue? Any and all comments and insight is appreciated.

Thanks!

[Michael Glist]

As mentioned you would be able to look into a NON-QM loan or a portfolio loan. 

The rates are slightly higher but the nice thing is that as you build your portfolio you will build up your income from rentals and potentially be able to refinance the loans down the road into a conventional product with a lower/standard rate. 

Just make sure that when you are out looking at properties that you are running your numbers with the correct rate otherwise it could make the deal turn from good to bad when you run numbers from a low rate to a rate that is higher as that can be a big difference in cash flow. 

I hope this helps.