There are several different types of income in the US tax code.Two main types are “active income” and “passive income".Active income is money you earn from working, such as wages from a W-2 job or income from running a business.Passive income is money you earn from investments like real estate, stocks, or rental income from your RE portfolio where you earn $ without actively working.Normally, you can't use passive losses (like losses from real estate investments) to offset active income like your salary from a W-2 job.That is unless you are an RE Pro.The reality is, that Real Estate Pro status is just a filing status similar to filing married or jointly.And if you are a real estate professional you CAN use passive real estate losses to offset active income from other sources.To qualify as an RE Pro you must:1.

I have already been fully qualified for both the line of credit and DSCR.

If down payment is your one issue with qualifying there are down payment assistance programs available. 

Pilot a unit or two with this renovation spec and see how much demand you get from QUALIFIED applicants.  

If you do not qualify for a conventional loan, DSCR and HML are the two commercial options available.

Some items typically needed to qualify for the loan are the following: 1.

I highly recommend a well-qualified REALTOR who works with investors and knows how to help you best.7.

I highly recommend a well-qualified REALTOR who works with investors and knows how to help you best.7.

So for me, my model is to buy a discounted property, spend less on the rehab when I can, get it refinanced to get as much of my money out as possible, get a little bit higher than average rent, pass the repairs of all minor things onto the tenant buyer, help the tenant buyer qualify for a loan, contract to sell the property at around 10% higher than current market value within a 3 year period of time, pay very little in transaction costs, and then 1031 the gain into a new property or properties that I find from wholsalers that are priced below market value and just trade up and keep repeating the process.The cash flow helps offset vacancy and also pays my assistants to help manage my businesses.

For the financial side they hire third year financial analysts (3 years removed from college) because they cost one quarter of what a qualified employee would cost.