Financing Hurdle - Conventional Financing

[Phil Brandt]

Hi investors,

I live in Brooklyn and have rental properties in D.C. and CT.

I am looking for advice to a specific issue I can't quite figure out.

I recently found a great single family investment opportunity in Denver. However, while I was working with the lender I realized that on my 2019 schedule E I put all my HOA dues on line 11 (management expenses) and apparently they should be on line 19 (other). Bottom line, my HOA dues for all rental properties (7 condos) are now being double counted in the underwriting system and it is just putting me over on the DTI. I could alternatively finance as an investment property (80 LTV and 4.0%) but would rather do it at a 90 LTV and 3.25%.

I explained that Fannie guidelines allow a lender to use the 75% of rental income (using lease agreements) minus PITIA (principal, interest, taxes, insurance, and association dues) instead of the schedule E if they have a valid reason for doing so (e.g., my HOA dues will otherwise be double counted).

I don't have any underwriter contacts and was wondering if anyone had suggestions for navigating this situation before I lose the deal.  Perhaps there is a precedent for handling this type of mistake...

Thanks!

Happy to field questions about investment opportunities in Brooklyn!