My DTI has hit a wall

[Brent Salazar]

Hello BP,

I have an interesting problem. I currently own 2 duplexes in my home town. 1 has tenants and the other I am house hacking. I am ready for my next deal and have hit a wall with conventional financing. The banks will use my W2 income and 70% of my total rents as income, and the mortgages/ credit card/ car payment/ ext as debt. I ran a scenario where I project my income with all 4 units rented and my DTI is maxed out for lending. Both units are still cash positive after counting 70% of the collected rents. See my financial footprint below. I have well over 20% equity in each property and have thought maybe I could shield the debt of these properties by either transferring ownership into an LLC or possibly having an LLC purchase them from me through a commercial lending? Not sure if either of these is an option. Thank you for your infinite wisdom!

income:

“Rents: 100%/ 70%”

Unit 909: 1300/910

Unit 909 1/2: 1400/980

Unit 101:1700/1190

Unit 101a:1000/700

w2: 4800

total:10,200 / 8580

expenses:

Truck: $500

Line of credit:$125 “$0 balance”

MV mortgage:$1550

Sedro mortgage:$1550

total:$3725

DTI:36% / 43%

[Steve Vaughan]

Originally posted by @Brent Salazar:

Hello BP,

I have an interesting problem.  ...credit cards and a truck payment of $500.

Not that interesting and the solution is obvious when broken down like this.

Sell the truck and pay off the credit cards or get really good at creative financing.  Your choice.