Portfolio loans and private non-recourse loans

[James Tiu]

Hello BP!

I will be refinancing a duplex in San Diego. The loan balance is at $420k. The appraisal value in 2018 was $650k. 

I would like to purchase another property in San Diego with my brother-in-law. With 43% DTI, we have calculated we would probably be close to $1million in financing using an FHA loan. We would like to buy a distressed property. Either a 4plex or a single family house and add an ADU. In the San Diego market it is tough to find a 4plex or a single family house and add an ADU for under $1million.

The big question is, should I refinance my duplex with a portfolio loan or a non-recourse loan where rates are higher, but it will free me from personal liability? This will in turn give me more financing and options in purchasing 4plexes, or single family houses with adding an ADU. Consequently, a refinance into a non-recourse loan will eat about $400/month of cash flow.

Thank you in advance for answering my question. I would really like to hear from investors who have multiple properties, have come across this situation with high DTI because of their market, have cash flowing properties, and have portfolio loans or non-recourse loans.