Quote from @Marshall Leipprandt:
@Elizabeth Perez Do you have good credit and limited non-real estate debt?
A lender is going to look at a couple things with your history of income, your credit, and your debt to income ratio (DTI) being near the top of their list in terms of importance.
For being self-employed, do you have a history of your combined income as being self-employed on your taxes dating back 2+ years? Since you don't work a W2 job, your lender will want to confirm that you have earned a steady and consistent stream of income as a business owner.
For your rental properties, the lender may include that income if you are cash-flowing assuming you also have a history of that documented on your tax returns for 2+ years. Lenders/underwriters may vary on their requirements here so it could be lender specific. If not cash flowing after taxes/insurance, this calculation will still play into your final DTI which the lender will be looking at.
Do you plan to have the current home sale finalized before purchasing your landlords home? Is your landlord willing to hold it for you? Also, doing some option of owner-financing on your landlord's home could work if they were interested in that option.
I would honestly say the best thing right now would be for you to research lenders and have a detailed conversation with them to understand what they need to see in terms of income, DTI levels, credit, etc. You will learn a lot from this conversation and it will help you understand what direction you should be headed and how to fulfill the various lending requirements in order to pursue your goals.
Thanks for responding! Both of our credit scores are averaging at 720. We don't have credit card, medical or student loan debts. We also own our vehicles. We have filed our business taxes for the past three years under our construction company's LLC. On our Supplemental Income report we are profitable as well.
Will lenders be more interested in business income, supplemental income or would they treat them the same if they are both profitable?
I do plan to have the sale of the home finalized before going to a lender just so I can have the down payment on hand. It’s currently in the market. I don’t believe that the landlord would do owner financing and if he doesn’t want to wait I still want a loan to buy somewhere else, preferably a multi unit.
What type of lenders should I approach? We have grown in terms of properties and profits for the past 3 years.
