Should I be worried about my DTI?

[Jean-Paul E. Gagnon]

Hi folks.

Just dipping my toes into the whole "private lender" thing.

Conventional lenders are not lending to me because the deal I'm considering will bring my DTI from 5p% to 53%.

Found a guy on BP who is fine with that DTI and ready to lend.

Question: is this too good to be true? If the banks dont want to lend, is there a good reason? If I push myself up to 53% am I putting myself at risk? What am I missing?

Some after deal financial basics:

Deal I'm considering will put me at 6 multi familys.

Total cash flow including w2 job will be $5900/month

$10k in reserves right now.

Thanks for any feedback

[Kyle J.]

@Jean-Paul E. Gagnon To answer your question about whether you should be worried about your DTI or not, I'd say yes, you should. Although some hard money lenders, and most private lenders, may not care about your DTI, you should be aware that those loans are generally short term and at some point you'll usually need to refi out of them. If your DTI is an issue for conventional lenders now, how will you refi out of that hard money/private loan in 12 months (or whenever it comes due)?

Point is, you need to be thinking about your exit strategy before you ever get into the hard money/private loan if you plan on keeping the property long term.

Also, one final note as a word of caution, be careful about who you meet online (even if it's on BP), especially if it seems to easy to qualify or "too good to be true".  There are a lot of scammers out there when it comes to hard money/private lending online.