California Investor looking to invest out of state but have a problem with DTI

[Kevin D.]

Hi,

I'm a newbie investor from California who's looking to invest out of state because the fundamentals in California is out of whack. My first investment was a 4-plex in a bad neighborhood in San Jose with low quality tenants. I sold within 3 years but learned quite a valuable lesson: don't invest in low quality neighborhoods with low quality tenants! The headaches were not worth it!

So now I'm looking to take my first hand experience coupled with tips from BP (I wish I found this place earlier) to invest somewhere else with good fundamentals. I am looking to invest out of state where a down payment the amount of a new car can put me immediately in positive cash flow territory. Comparing the fundamentals from other states, I'm amazed why anyone would rent at all since it seems like a no brainer to just buy as it's ridiculously cheap to own!

Okay, so my biggest problem is this: my DTI is very high because I own multiple homes. However, my credit score is excellent 750+, income is high, and my liquid assets is also relatively high (500k). The prices for some of the homes out of states are equivalent to a very expensive car. Those car loans only care about income and credit worthiness. Is it possible to get loans to purchase homes in these other states where the lenders are more lenient on DTI?

I can always purchase with cash, but without the ability to use leverage, real estate loses its shine. Any advice is appreciated. Thanks in advance!

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[Brie Schmidt]

@Kevin D. - It might be time to look into commercial financing. We were in the same boat with about $1.25 million of property on the residential side and were able to easily get a commercial loan. 5 years at 5% on a 25 year amort. The problem you might run into is most banks won't do sub $250k loans - so we ended up buying 8 properties at once in a portfolio deal ($520k total) with a 80% LTV