Vacation Rental. How To Get Financing With High Debt To Income?

[Kendall Luelf]

Hi all! This is my first post here and I'm happy to be apart of such a knowledgable community! Here's my situation...My wife and I currently own and manage 2 vacation rental properties. We would like to expand eventually buying several more but we're stuck between a rock and a hard place because after purchasing the 2 properties and having a mortgage on our primary residence as well, our debt to income is too high for our bank to issue additional financing for more properties. We've owned for 2 years and are claiming about $25,000 yearly profit on our tax returns (including depreciation) which means we can finally include this as income. The properties are doing better year over year and are earning between 20% - 55% cash on cash return. We'd like to expand adding a much larger property ($500k - $800k) to our portfolio and unfortunately, this additional $25,000 in income won't drop our debt to income enough to receive financing for said property. I'm here to ask for advice on the next steps to take. Here's options I've considered but not pursued as I'm not sure of the best route: -Create an LLC and use a quit-claim deed to transfer the 2 currently owned properties into it. Could this also transfer their debt into the business and lower my personal debt to income? -Find a Commercial Lender. Is there a commercial loan in existence that offers 20 years payoff without a balloon? -Create an LLC and find a partner to own a stake in the company for use of their money to purchase the property. Or even find a solid investor to co-sign a loan for a percentage of net income generated from the property. Any help or advice is appreciated! My wife and I are in our late 20's and don't want this great opportunity of creating real estate wealth to slip away. -Kendall