Debt to income ratio

[Taniya Lovejoy]

What if your debt to income ratio is too high and you cannot get a loan from a bank. If you get a loan from a private lender and then when you go to get a cash out refinance on a rental property can you run into issues from the bank due to debt to income ratio? 

[Louis Jeffries]

@Taniya Lovejoy Yes conventional loans are not really made for investors. Investors buy properties for business purposes and cash flow. Business purpose rental lenders do not look at your personal income or your personal debt. They base the loan on cash flow of the property. Additionally, business purpose rental lenders have no ownership seasoning or short ownership seasoning to get cash out even up to 80% cash out. You do not have to own the property for an entire year. There are even rental programs that will refinance your property and give you cash out before the property is fully rented. Business purpose lenders also allow you to protect yourself and your personal assets from lawsuit and other financial risks by allowing you to own the property in an entity versus your personal name. 

These factors make business purpose rental lenders the Ideal choice for someone practicing BRRRR and looking to build and expand their portfolio. With business purpose rental lender, you can potentially do 3 to 4 projects in one year versus only one deal in a year depending on a conventional bank as your funding source.

All these benefits create a higher risk to the lender, and therefore rates are slightly higher. 

I hope this information helps you Taniya!