All Forum Posts by: Kevin Luttrell

I have income from a W2, 1099s/Schedule C, and rental income on my house hack. Something about this seems to make calculating my DTI wacky; I know lenders aren't just adding up my gross income from all these sources and dividing my debts by that. However, I haven't found anyone who would break down for me how exactly they calculate it, then. My understanding is that it varies from lender to lender as well.

The difference between being able to use a 10% second home loan vs a 20% down DSCR loan would mean a big difference in how quickly I can purchase my next investment. Understandably, lenders don't want to crunch these numbers for me before knowing if I'm ready to apply for a loan… but whether I'm ready to apply depends on whether I can get 10% down or not. Sigh.

So how can I accurately calculate my DTI to determine once and for all what my options are? Any advice or suggestions?

For base salary income, your current earnings are used to qualify. For schedule C usually it's a 2 year average via tax returns to qualify (although exceptions can sometimes be made for 1 year average). Rental income is usually calculated from your schedule E on your most recent filed return.

This is way oversimplified - there are exceptions and alternatives to these rules and some banks could have additional overlays. Like Allan said you'll really just need to complete an app with someone to get any concrete info.

0 Votes

Quote from @Jennifer Gardner:

@Kevin Luttrell yeah exactly that's why I don't know how to compensate her for her time. She's been making some labels and doing some small last minute things but she has a background in property management so helped me find my LT tenants and helped me set up this whole endeavor so she's invested emotionally. Basically I don't want to cut her out completely and will be needing her to run it once or twice a year when I'm out of reach due to long-distance travel.

Things she might need to do could include ongoing improvements but I plan on going down there every three months or more so thinking I could work on those myself as well, with her help because she's got such a great designer's eye and is always up to help. She wanted to work on the guidebook for me so did that but hasn't sent me an invoice yet and I'm just not sure what to ask.

It's complicated by the fact that we're friends but she was a friend of a friend before this whole process and has only since this become a close friend who I respect and appreciate a lot.

If she's just going to be doing small things here and there, I agree with John that probably paying her an hourly rate for when she does work is appropriate. If she's going to be regularly involved long-term, I'd say set up a contract with her for a flat monthly rate. Hard to say an amount, really depends on what she's doing. To give you a frame of reference, I had a cleaner quote me $200-$250/mo for handling all guest communication and coordinating maintenance/repairs for my vacation rental in the Smokies. That was in addition to the cleaning fee per clean.

0 Votes

Long Beach, California

@Lisa Chipp if you’re going to use primary residence financing for the new property, it needs to actually be your primary residence. You’ll sign disclosures stating it’s your intention to move in within 60 days of closing.

The underwriter will also do some due diligence during escrow to make sure it actually will be your primary residence. A red flag would be purchasing a smaller or lower valued property close to your existing property.

0 Votes

Tacoma, Washington

@Jennifer Gardner if you’re handling guest communication and bookings and you have a team in place already for cleaning and maintenance, what is she doing?

1 Vote

Long Beach, California

Quote from @Sarah Hunt:

We have an accepted offer on our very first vacation rental! However the first homeowner insurance quote I received was more than my residential homes insurance and my home is worth 4 times as much. Does any one have recommendations for insurance companies they use for their vacation rentals?

Location is a big factor in what insurance companies you can use and what premiums they charge. Some insurance companies are extremely competitive in some areas and super expensive in others. Find one or two insurance brokers who can shop it around with multiple companies to find the one that fits best in your area.

1 Vote

Memphis, Tennessee

I'm also on the Stessa boat. I was paying for REI Hub before and found I actually like Stessa better. And it's hard to beat free.

3 Votes

Quote from @John Underwood:

Quote from @Kevin Luttrell:

@John Underwood FYI, TNTAP just approved my FONCE exemption for both of my TN LLCs. One is a single member LLC with 1 property purchased last year for $435k, now valued around $550k. The other is a 2-member LLC with 4 properties purchased for a combined $1.085M and now valued at around $2.3M. The 2-member LLC is owned by myself and my father-in-law.

Both exemptions were approved very quickly with no questions. All I did for the 2-member LLC was provide documentation proving the relationship between myself and my father-in-law.

I don't know where your attorney came up with the $200k number but it looks like that's false. Seems you shouldn't have a problem getting the FONCE exemption.

So my attorney went back to them and now they say we can qualify for the FONCE exemption.

Are You doing a Wyoming or Nevada LLC? They have charging order protection and don't reveal ownership. You just have to record the LLC with TN.

My LLCs are both formed in TN. Not a bad idea to form in WY or NV, I didn't really think about it when I created mine.

0 Votes

Quote from @Karen Chenaille:

I have used Price Labs, Wheelhouse and Beyond pricing. Price Labs is definitely the best value, even though it's UI is a bit clunky. Beyond Pricing charges based on the booking value. If your guest cancels, you don't get a refund of the Beyond Pricing fee. Price labs costs me about 20% of what Beyond Pricing was charging me. Wheelhouse is very slow to adopt changes. I was with them in their earlier days, they kept promising VRBO pricing, but never delivered.

Thanks Karen! I appreciate the input. Yep Wheelhouse still hasn't added VRBO and is still promising it, lol.

I just ditched Wheelhouse and am now trying PriceLabs and I already like it better. I've noticed some nightly rates are lower and some are higher than Wheelhouse had me at, and it aligns more with what I would expect.

1 Vote

All Forum Posts by: Kevin Luttrell

Kevin Luttrell has started 18 posts and replied 283 times.

Post: Recommended cleaning company in Branson area

Post: Cleaner in Long Beach

Post: DTI Calculation Confusion

Post: how much to pay my cohosting friend

Post: Conventional Loan for Rental or Flip

Post: how much to pay my cohosting friend

Post: AIRBNB Homeowners Insurance

Post: STR Accounting Software

Post: STR in TN (Pigeon Forge) Asset protection - How to hold deed?

Post: What's your preferred dynamic pricing engine?