LLC's And Ratios
Hi all,
I am not sure if this is best posted here, but here goes. I want to acquire a few rental properties, but with the whole 75% adjustment kills my ratios for qualifying for additional loans on new properties. Until I get a decent portfolio and make a pitch to get a line of credit from a bank, I was thinking of putting each property in its own llc. Does this "hide" the property from the ratio statistics, or am I misrepresenting myself when applying for loans on new properties? All of them cashflow for few hundred a month, but real raise my debt to income. Thanks for any insights.
First off, when you have a rental, the income does not raise your total income, and the payment does not raise your total debt payments. In other words, any worth while lender doesn't count rentals in your DTI.
Take your income for a property, x by 75%, and then subtract your mortgage payment. If it is -, then that - is whats added to your debt payments. If its a +, then that + is added to your income.
Otherwise, no one would be able to buy more than 3-4 rental properties! everyone would be at 80% dti... Lenders understand this.
You also should look into a stated income loan. stated lets you say whatever you want is your income (within reason), but document your assets. You usually need a 620 credit score to do this.
PM me if you want more info/help, I'm in your area, and have done this a few times.
-Joe