Moving to 1 income

[Jalen Phillips]

My wife and I have come to the decision that we would like to go down to one income and I focus on real estate investing and pursue another way of obtaining income. We have decided we will house hack if the right opportunity comes available to us and we plan to live in a property for a year and move to a new property to help grow our portfolio. 

We were curious on different ways to get loans since we would be down to one income? I’ve heard of hard money and private lending but don’t have any experience with that currently. Would we still be able to do conventional financing? 

All thoughts and advice is greatly appreciated!! 

[Scott E.]

That's a big decision, but I respect you guys having the courage to take the leap. My wife and I made the same decision about 15 months ago and while it was very scary, we now know we made the right move.

If you go down to 1 income, I'm assuming that you will be able to pay all of your basic expenses off of that 1 income. Or if you will not be able to, you'll need a big pile of reserves to help cover the difference for a couple of years.

For lending, you have a few options:

1. Hard money loans for fix & flips. Most won't look at your personal DTI.

2. DSCR loans for buy & hold deals. They won't look at your personal DTI.

You're probably not going to be able to get a conventional loan for a while unless that 1 income is high enough to cover ~2x your monthly expenses.