All Forum Posts by: Brent Salazar

Thank you all for your individual input. I will process this and get back to you all this evening. I’m encouraged by all the support and expertise!

 Ben,

Thanks for chiming in, you are correct in stating my dti calculation is only including my current mortgages not any future mortgage with additional income. I have owned one of the property’s for 3 years, and the other is about 1.5 years. Your suggestion of using the true asset performance after the 2 year mark may be the ticket if I wait another 6 months, with the additional income of the future purchase. As for lowering my debt the bad debt I carry is the truck at $500 a month. The line of credit is intended for emergency situations or potential rehab costs. Thanks for the input! 

Side note, anyone have experience with shielding asset debt from personal debt through a business entity? It seems that investors with a lot of property all do so through an LLC. The LLC purchases / owns the property through commercial lending. Lending is evaluated via DSCR of the asset instead of Personal DTI. This option would be more expensive but also allow for scale. I am understanding this concept correctly?

Thanks for the tips Matt. I’m definitely going to do more homework on specialized lenders. Any tips for finding/ executing a successful owner finance deal?

@Matt Nico

Hello BP,

I have an interesting problem. I currently own 2 duplexes in my home town. 1 has tenants and the other I am house hacking. I am ready for my next deal and have hit a wall with conventional financing. The banks will use my W2 income and 70% of my total rents as income, and the mortgages/ credit card/ car payment/ ext as debt. I ran a scenario where I project my income with all 4 units rented and my DTI is maxed out for lending. Both units are still cash positive after counting 70% of the collected rents. See my financial footprint below. I have well over 20% equity in each property and have thought maybe I could shield the debt of these properties by either transferring ownership into an LLC or possibly having an LLC purchase them from me through a commercial lending? Not sure if either of these is an option. Thank you for your infinite wisdom!

income:

“Rents: 100%/ 70%”

Unit 909: 1300/910

Unit 909 1/2: 1400/980

Unit 101:1700/1190

Unit 101a:1000/700

w2: 4800

total:10,200 / 8580

expenses:

Truck: $500

Line of credit:$125 “$0 balance”

MV mortgage:$1550

Sedro mortgage:$1550

total:$3725

DTI:36% / 43%

@Ralston Grose I’m not familiar with your market but if that was in my back yard I would go for it.

Hello BP, I have a question for those experienced investors. Do i need to talk to a lawyer or an accountant about forming a business entity? Anyone have recommendations for Mount Vernon, WA or the surrounding Seattle, WA area?   

its a tough market right now, my agent knows the area really well and has high hopes more inventory will hit in the next couple months to meet the demand of buyers. In the mean time like Julie mentioned word of mouth is your best bet, time to get creative 

https://www.redfin.com/WA/Burlington/513-Gardner-Rd-98233/unit-517/home/104008118/nwmls-903917

My first choice would actually be to house hack a multi family property, but as you mentioned the deals here are very scarce. I offered on this duplex just this Sunday, but was denied. You may be interested in putting in an offer? My backup plan is to fix and flip a property so if you come across any deals i would be most appreciative. I am quite handy, but will most likely contract out most the work. If i had experience setting windows i would be more than willing to help, but thanks for the opportunity. @Julie Marquez