All Forum Posts by: Darren Looker

@Dave Skow I quoted you in an email to the lender and they have somehow qualified my additional income so the loan will go into closing. I'm not sure if it's because of what you said or because I told them I was talking to other lenders. Either way, I'm very thankful and I owe you a drink the next time I'm in Seattle.

@Dave Skow Thanks so much for that. I'll give it a try.

@Dave Skow Thanks for the response. I'm willing to try. Can you translate that into plain English for me?

I have a LTR SFH in Dallas, TX that I am trying to refi with cash out. I am in the middle of the process and I was told that I need my 2020 and 2021 tax return processed by the IRS to confirm rental income. Fannie Mae rules don't allow a tax return and a letter from my CPA stating the accuracy to be counted for rental income. Without rental income from the LTR, my DTI is too high to get qualified. I've been waiting on my 2020 tax returns to be processed by the IRS for 4 months now and expect to be waiting for 2 more months. My 2021 return has been filed but will likely take at least 30 more days. In the meantime, my rate lock will expire.

My current mortgage is 5.5% and my rate lock is at 4.625%.

Appraisal on house is $555K and loan is for $413K with payoff amount of about $345K.

The property does not currently cash flow but has great appreciation and is in a highly desirable area.

I have tenants in place on a month to month basis that have been there more than 1 year.

I also have a short term rental that cash flows well.

Are there other refi options for someone in my situation? Is there a way to get credit for the rental income?

I would consider a DSCR loan but don't know if I can get cash out and I don't know anything about a seasoning period.

I am seriously considering conversion to STR and have run the numbers and talked to other operators in the area but think that I need to refi before conversion because of lending requirements.

I would want to use the cash out to furnish the property if I go that route.

Thanks in advance for any help.

@John Thompson I would sell it unless It would work well as a short term rental. You would want to do some market research on AirDNA and re-run the numbers.

@Andrew Freed

Great discussion topic. Following.

@Dave Price @Gerald Pitts Is correct. There is no limit to how many you can buy at 10% down as long as there are separate markets and you can qualify. The usual rules regarding number of loans you can have at one time would apply.

One of the difficulties I'm experiencing is with debt to income ratio. Lender don't like short term rentals as income for qualifying. On long term rentals they count 75% of the rent as income. STR's are like a business and need 2 years of tax returns. If anyone knows good strategies for getting around these issues, I'm all ears.

@Jaime Martinez Jr

Texas prices are cheap compared to CA but you will pay very high property taxes.

DFW, San Antonio, and Austin are all booming.

DFW is very large. I can point out some areas that are probably not on most people’s radar depending on what your budget is.

@Michael Elefante

I love your story! Thanks for sharing.

Forgive me if I didn’t notice a post covering financing in depth.

I'd like to point out that when you buy a property in another market for use as a short term rental, you can designate it as a vacation property and only need to pay 10% down. You'll have to pay PMI but this makes it easier to get started.

Any subsequent property can also be a vacation home if it is 65 miles away. This might spread out your assets into different markets and make it harder to manage but could grow your portfolio quicker.