Would like to pick your brain about my options

[Christian Banchs]

Hello BP! I will give brief context and do my best to explain the current situation and my goals.

I bought a house with my then girlfriend in 2008 (worst time, I know!) when I was 22. We didn't know what was about to hit us and a year later the house was extremely underwater due to the subprime mortgage crisis. Shortly after that we broke up and I continued to live in house by working 60 hours a week, getting a tenant, and cutting spending; all while going to nursing school full time. 

Fast forward a few years later, my ex moved back into the house and currently lives there with her children and husband. We have a great relationship with mutual respect. The house has not been formally appraised, but based on the data I've researched I can confidently predict it has accrued some equity. 

We have discussed several times over the years them buying the house so I can get off the mortgage. The hurdle to this has always been their bad credit scores and debt to income ratio. 

I am new to real estate investing and would like to explore my financing options with lenders in hopes of buying my first property next year. With that being said, the consensus with my initial conversations has been that I couldn't qualify for a new loan because of the aforementioned house. 

What would you do in my situation? What creative strategies am I missing? 

Thank you in advance for your knowledge and feedback! 

[J. Mitchell Bernier]

So without know much more than what you posted. If they can't buy the house from you due to their credit history and or income, get them to sign a long term lease for the same amount of the payment. Most community banks will see that lease and add the extra income to cover the debt payment. Allowing you to have a lower DTI. The lease will have to be for at least a year and you will probably have to show history of it being rented, but that is the simplest answer for your complex problem.

Good Luck!