All Forum Posts by: Eric Winters

@Eric Winters I personally lean towards starting with rentals. I first purchased my four unit property in Lyons, IL three years ago. It has been a cash cow and easy to manage. Since then I have purchased 29 rental units with my partner in the Chicago suburbs. Rentals have been very profitable, and very low risk honestly. 

I am currently doing my first flip here in Berwyn, which is a great market for flipping. My partner and I bought the property in cash for $140,000 and have put well over $100,000 in renovations into it. We will definitely make money, but that is a lot of risk in my opinion! You have to be properly capitalized to pull of that type of move. 

What makes you think you will have to wait a year to be approved for another mortgage?

Once you get that house rented, you'll be able to count the rent against the mortgage.

Some banks might require 2 years to count it. But you can always go to a local bank and do a commercial/portfolio loan. They won't require 2 years of landlord experience to count the rent.

They'll take 75% (or 70, I forget which) of the rent and offset that against your PITI of the rental. If its positive, you'll add that to your income. If negative you'll subtract that against your debt. So it won't really affect your dti at all.

i.e. If salary is 5k/mo and your debt payments are 2k/mo, your dti would be 40%. If your rent on your rental was 1200 and your PITI was 800, they would take 75% of 1200 (900) and subtract 800 and get a positive rental income. They'd then re-do your dti calculation as:
5,000/mo income plus 100/mo rental income = 5,100 
2,000/mo debt payments Divided by 5,100 = DTI of 39.2%

So the rental would actually help your DTI in that instance.

@Eric Winters Not sure of your cash position, but rehab and wholesale to generate cash to put into rentals has been a pretty good strategy. I know good rehab deals are very tough to find in most markets right now.