All Forum Posts by: James Orr

Thanks @Jeff Dulla!

> 1. Everything you mentioned but Utilities. Also credit card minimum payments, student loans, car loans, leases, child support, alimony, etc.

I will go ahead and remove Utilities. These were Utilities the landlord paid (not ones covered by the tenant) so that's why it was in there to begin with.

In our software, we are not allowing someone to enter in credit card payments, student loans, leases, child support or alimony. What we're calculating is the minimum income required assuming you have no other debt, etc.

> 2. Depends on the situation. If you are talking about a seasoned investor with two years of tax returns there is a formula used based on their schedule E. If you are talking for a new investor, they will take a fully executed lease and proof of deposit from renter - take 75% of that for monthly income.

Yes, we're going to use this to determine how much they'd need to qualify for the next property purchase.

> If you are buying a brand new investment property they will typically have the appraiser do a rent schedule of comparable rentals - take the average rent they come up with and use 75% of that for qualifying.

Thanks.

> 3. I would use 45%. 50% could go through but is going to be the exception and not the rule.

OK. I can adjust that back to 45% instead of 50%.

> Is the point of the formula to get close to the actual debt to income ratio the underwriter is going to use to qualify? If so, it is leaving out all debts outside of the singular real estate transaction.

So, we're actually using it to determine the income they might need to make the purchases they're modeling for their portfolio. If they input into the software they want to buy a property every year or whatever, we want to show them approximately what their income will need to be to do that plan.

> Hope this helps. 

It helps a lot. Thank you!

Lenders...

I have a question about how you all calculate Debt-To-Income so I can work backwards and determine how much income someone would need to qualify for a loan.

We are writing some software to model real estate portfolios and want to make sure we're calculating Debt-To-Income to be able to tell people, you'd need to make this much money to be able to purchase these rental properties and show them charts like this one.

So, here are my questions:

1. What is included in the DTI calculation? Rent, Mortgage Payments, HOA?, Utilities?, Property Taxes?, Property Insurance?

2. Are you using 75% of rent? Or, some other percentage?

3. Should we be using 50% DTI ratio? Or something else?

Here's our formula that we used to make the above chart:

MinimumGrossMonthlyIncomeRequired = ((MonthlyRent*.75) - MortgagePayment - (HOA/12) - MonthlyUtilities - (PropertyTaxesDollar/12) - (PropertyInsuranceDollar/12))/-.5

Thanks in advance.

We have posted the recording of this presentation. You can watch it here

https://jamesorr.com/using-self-directed-iras-and-401ks/

The recording from the last time we taught this class can be found here:

https://jamesorr.com/acquire-multi-milli%c2%adon-dollar-real-estate-portfolio-starting-3000/

Thank you to everyone who attended last night!

Join us as our expert instructors take you through everything you need to do to be a master at property management!

These classes are open to everyone and curated through MeetUp.com. For additional details and to RSVP to this class please visit us at https://www.meetup.com/Northern-Colorado-Real-Estate-Investor-Group. It's free but RSVP is required as space is limited.

Join us for Part 2 of our amazing class on real estate partnerships.

These classes are open to everyone and curated through MeetUp.com. For additional details and to RSVP to this class please visit us at https://www.meetup.com/Northern-Colorado-Real-Estate-Investor-Group. It's free but RSVP is required as space is limited.

Modestly titled, this class is an advanced goal setting class for people who want to create passive income with their real estate properties to replace their current income.

Our experts will walk you through some exercises and give you some powerful new handouts and tools they've been working on to make achieving your passive income goals with real estate easy and fun.

Come to this class... to take your real estate to the next level.

These classes are open to everyone and curated through MeetUp.com. For additional details and to RSVP to this class please visit us at www.meetup.com/NCREIG-Greeley. It's free but RSVP is required as space is limited.

Modestly titled, this class is an advanced goal setting class for people who want to create passive income with their real estate properties to replace their current income.

Our experts will walk you through some exercises and give you some powerful new handouts and tools they've been working on to make achieving your passive income goals with real estate easy and fun.

Come to this class... to take your real estate to the next level.

These classes are open to everyone and curated through MeetUp.com. For additional details and to RSVP to this class please visit us at www.meetup.com/NCREIG-Loveland. It's free but RSVP is required as space is limited.

Modestly titled, this class is an advanced goal setting class for people who want to create passive income with their real estate properties to replace their current income.

Our experts will walk you through some exercises and give you some powerful new handouts and tools they've been working on to make achieving your passive income goals with real estate easy and fun.

Come to this class... to take your real estate to the next level.

These classes are open to everyone and curated through MeetUp.com. For additional details and to RSVP to this class please visit us at www.meetup.com/NCREIG-Longmont. It's free but RSVP is required as space is limited.