All Forum Posts by: Matt Wells

I am going to purchase a rental and the seller is willing to carry the loan. I am wondering if a seller financed property will affect my DTI for obtaining conventional Freddie Mac and Fannie Mae loans. Does anyone have any insight?

@Andrew Postell Yes! That is exactly the information I was hoping for! Let me know what you think about the following scenario and if it's correct.

I. I purchase the first property 100% paid for with a line of credit secured by financial assets

2. I purchase the 2nd property with 20% cash down payment with a Fannie Mae or Freddie Mac conventional loan.

3. Since the first property I purchased is with a line of credit secured by financial assets, it does not negatively affect my DTI ratio when I purchase the 2nd property with a Fannie Mae or Freddie Mac conventional loan. The line of credit property essentially does not exist when considering DTI for the 2nd property?

@Andrew Postell So if my line of credit is secured by my investment account that means it’s not long term debt? The monthly payments on the line of credit will be interest only, so that is considered debt? This confuses me, seems like it says it’s debt and it’s not debt at the same time. Can you give me an example? It would be much appreciated. Thanks!

@Andrew Postell Thanks! I keep hearing different things. Some say the security backed line of credit will not go on my credit score and some say it will. I keep finding conflicting info online. Some say since it’s a line of credit it’s not a loan. I am confused honestly.

Does using a stock investment backed portfolio line of credit affect the debt-to-income ratio for obtaining conventional Fannie Mae & Freddie Mac loans? I would like to use my line of credit to flip homes and also purchase more rentals with conventional loans. Any advice would be much appreciated!

I am going to get a margin loan from my stock investments to flip a house. However, I also want to purchase a rental using a conventional loan within the same time period. Will the margin loan affect my DTI ratio and hinder my ability to get a conventional loan?

What are your thoughts about having 3 projects simultaneously to scale quickly to reach the 10 loan limit on conventional loans. Then adjust the plan to scale commercially from there? I am thinking this: Buy homes with 20% down on conventional loans, Flip, and BRRRR all at the same time. Assuming there is capital available for the 3 projects, does this seem like a good plan? It seems like you would benefit from the advantages of all 3. Please weigh in on the pros and cons of this.

1. 20% down conventional: Low rates, locked in for 30 years, not leveraged as much, more cash flow.

2. Flip: Flip homes and use W2 income to finance rentals on conventional loans.

3. BRRRR: Complete the BRRRR process and leave as little money in the deal as possible while making sure monthly cash flow is at least $200 after expenses.

What does everyone think?

How long does it take to get the tax return documents once you file your taxes? I want to start looking for a rental, but I won't be able to get approved for another loan until the 2020 return docs are available. I will be getting a conventional loan, not a commercial. Does anyone have any advice or experience they can share? Does it take days or weeks for the IRS to come up with the documents once filed?

@Evan Polaski Good point. I won’t be responsible for any possible losses so that should be spelled out in the contract. This is standard in these types of agreements?

@Mark Bosworth This is how I want to do it. Thanks for the advice! My partner doesn't want to be bothered with tiny details, but they will want to participate in major decisions and would like to have access to the financials. Thanks, this helps.