Help-write offs leave high DTI ratio!

[Charlene McNamara]

Wondering if anyone has words of wisdom for me regarding lowering my DTI ratio for the sake of future financing. I've always worked under the following givens:

-I try to leverage as much/best as possible, therefore have a decent amount of debt

-I try to lower my taxable income by writing off as much of my expenses as possible, therefore my year end statements often show minimal gains, sometimes even losses even through write offs, even though I am making money. I also dont report gains if it is not legally required to do so.

-I have cap losses that I harvest every year from an inheritance which means I did not lose any money, but I can get the tax advantage as if I did! (My father did not leave me assets, but did leave me losses that can be tax harvested for several years.) Also, upon purchasing new property, I usually report good losses in the first year due to all the purchasing expenses that can be taken as losses. Thus reducing my income on paper even more (again- good for taxes, bad for DTI)

So my income shows low and my debts show high and my DTI is now 48%! So in looking for financing I look really over leveraged and can't qualify for most traditional lending.

What do most of you do assuming you also try to lower your taxable income and use leverage to purchase more RE?! I feel like I'm missing a piece of the puzzle here....decent income, but on paper we show high DTI due to trying to write off as much as possible for tax purposes! I feel stuck and unable to move forward, yet we fully have the means to do so!

[Sasha Mohammed]

I'm with @Kenneth Garrett on this one. Stop wasting your time with DTI. It's moreso for consumers than investors anyway.

Real quick disclaimer -- IF you CAN qualify with DTI, you should. almost always. the terms will be better, the rates will be lower, but you'll work for all of that with the amount of paperwork you'll provide in order to obtain it, and exactly what you're doing now -- time spent figuring out how to make it work.

Don't force your square-self into a round-lender hole. There are lenders that will accommodate your needs as an investor, and won't care about DTI. Some won't even ask for your tax returns at all!

Do some research on Debt Service Coverage Ratio (aka DSCR). this should open up a whole bunch of lending options that should make your life a whole lot easier. Or better yet, find a broker who is experienced in these types of loans, they'll guide you.

Best of luck!