Investment property without it affecting DTI

[Patrick Forelli]

Hello BP community.

I currently make 125 k a year and I own 1 property that is performing well as an STR.

I dont have the upfront cash to purchase another for a down payment but my parents are interested in financing my down payment with a 5% interest rate. 

I should be able to qualify for a DSCR loan or conventional loan, but I see down the road that this could affect my DTI and make it difficult for me to get more mortgages in the future.

I understand I could use a conventional investment loan and my parents could co-sign the loan to give me better terms, but does this remove the loan from my DTI? I assume not.

If the property was purchased under an LLC and my parents get a 5 % preferred return and they personally guarantee the loan, but I take the majority of the income, does this remove the loan from my DTI?

My parents are interested in supporting me and they are at a stage where they have a comfortable amount of money, they have excellent credit and they have no plans of taking out a loan in their lifetime. 

Are there any creative strategies for them to secure the loan without it affecting my DTI?

They also want to avoid any liability at all cost which is why I suggested an LLC structure. Is an LLC a secure, 100 % fool proof method to protect my parents assets?

[Corby Goade]

This is the same struggle that every new investor has- DTI will keep you from getting more loans quickly than any other factor. That's why it's important to buy in growing markets with solid rent and population growth.

There will be risk to your parents regardless. The best way to mitigate that is to BRRRR and build some equity for a cushion for them.

Best bet is a DSCR, but you might have trouble with a BRRRR, but you could always refi in to DSCR after rehab.