Creative Financing Ideas Needed

[Rob B.]

So here's the scenario: My wife and I have been investors for about five years. We have a good sized portfolio that makes us good money, but it has also maxed out or DTI for residential loans. We recently purchased a residential property management company in San Jose, CA that is very profitable, but it's also part of the problem. We have a nice home in San Leandro, CA (About 30 miles North, between 1-1.5 hours in traffic). Because the business manages about 110 units, I am in San Jose nearly every day and I'm spending a large portion of my week commuting.

We want to buy a property in San Jose because it is central to the units that we manage and will take three hour trips for showings down to an hour. The problem is that even though we are making good money and financially sound, our DTI is through the roof, all the more so because it was an asset sale, not a stock sale, and so the banks consider it a new business, even though it's ten years old. We have about $200K to put down on a house that will be in the $600-$800K range. In reality, we make good money, about $300K/year, but $200K of that is from this "new" business, $50K is from my commissions as a real estate agent, and $50K is from my rental properties, a lot of which have been purchased in the last 12-18 months, so most lenders won't count them.

We considered going with a commercial/residential building that we could buy as a live/work space (still an option, but we haven't found many good properties). I know that we can go hard money if we keep under 65% LTV, but it wouldn't be worth it to me. Other options are Seller Financing or Creative Financing Options. We only need it for 16 months since we'll be at the two year mark where we can count the business income.

Does anyone know a California lender who goes off of common sense principles? Either stated income or hard money that isn't too expensive. With how hot the market is out here, Seller Financing isn't going to be an option. We make good money, but we have a ton of debt too, and most of the income can't be counted by using standard bank principles. Our total debt is about $1.5M, total assets about $2.4M. Monthly PITI payments; $9,800, Monthly Income: $25K. Thoughts Appreciated.