All Forum Posts by: Ryan Randall

 Thanks @Katherine Blazer. Agreed that lenders aren't all created equal!

Closed on two 4-unit deals, next house will be my primary.

Just actually went through this worksheet @Jay Hurst

This should really be posted on all of those "How do I qualify if I already have xx properties", or "Does rental income hurt my DTI?" related posts. It really gave me the transparency I wished I had in the lending process a few months back. Very straight-forward to follow!

@Jay Hurst

First time I've seen this PDF worksheet, thank you for sharing! I'll have to use this prior to my next purchase. Had a lender who calculated my debt against me twice the last time I applied for a loan. DTI went from 49% to 26% after I corrected his mistake

@Nathan Gesner Your wisdom is appreciated. Haven't run into this yet, but I imagine it's only a matter of time. I'll be using petscreening in the future.

So, I've seen posts run the gamut here on Biggerpockets when it comes to how Fannie/Freddie calculate your DTI including your rental properties.

Let's say, for arguments sake, I have 1 rental property which grosses $2k/mo in income, and has $1k/mo in expenses (for arguments sake, it nets $1k on tax returns). 

Let's say I also make $5000/mo and I have $2k/mo in fixed expenses.

So, lenders, how is my DTI calculated?

Is it  ($1000 + $2000) / ($5000 + $2000) or 0.42%?

Or is it ($2000) / ($5000 + $1000) or 0.33%?

Maybe it's just me, but I'm tired of these different interpretations of how DTI is calculated with rental income from Fannie/Freddie's guidelines. For me, I've assumed (and had my own lenders calculate) the second one or 0.33%. However, I see all kinds of different interpretations here.

I can't help but think that the folks pushing the first one are either doing so out of ignorance, or they are attempting to funnel folks into their own private lending programs out of "fear" that traditional conventional won't work.

Any help is appreciated, thanks.

 That's not how my lender(s) calculate w/ Fannie/Freddie guidelines. They go off the net K2 income from the properties and add it to the "Income" section. 

Thanks @Randall Alan, I agree that $6500 is a lot. Unfortunately, prices (like everywhere) have just been skyrocketing. Thankfully the cashflow from the 8 units helps offset.

I've built up a rental portfolio of 8 cash-flowing units in a very solid area, netting roughly $6k/month. I've done this by living in them, and renting out the other units. It's worked out wonderfully, and I've been able to build solid equity while creating a strong cash-flowing portfolio in a good area.

My next purchase, however, will be my primary residence. I live in a fairly MCOL-HCOL, where I'd be looking anywhere from 500k - 900k for a purchase price. This would give me a PITI of up to $6.5k where I live (higher property taxes).

My question is, what is a reasonable PITI that I should be looking at, so that I don't overwhelm myself and can continue living a comfortable lifestyle? My thinking is, my real estate investments should be able to pay my PITI payments. My wife and I bring in roughly ~200k/yr, but I only work part time. I have no plans on going FT, and may ratchet down my work even less in the future. Any help/guidance is appreciated! I just don't know the best way to approach buying a principal residence, and what factors I should consider to continue living a lifestyle where money isn't a huge issue.

 I'm glad you noticed. I noticed that as well. Time for biggerpockets to add some reCAPTCHA for fishy posters. I'm guessing this guy is trying to build up a "reputable" track record of consistent posting to sell people something.

That said, look for the absolute best school district you can afford with the most square footage on the best lot.

This is good advice, thanks! I imagine it leads to not only stronger appreciation over time, but also probably a better experience for our future kids.