I am seeking information in how to purchase another piece of property after debt to ratio is too high.
jerseygirl,
The market for buyers is going to stay really good for a while.
So, how fast can you pay down your debts? There’s lots of ways to do that if you are motivated–find lower cost housing for yourself, get a 2nd job, quit buying stuff, pay off the credit cards.
There are two ways to reduce your debt to income ratio: 1. Earn more money 2. Reduce your expenses.
These measures will take a little time but you will get your debt to income ratio down and get you qualified for your next real estate purchase.
Furnishedowner
Make sure you use a mortgage broker that deals with investment real estate and not a retail mortgage broker. If you do they should be adding back 80% of the rents to your income. That should never run you out on debt to income.
How about buying ‘subject to’ deals. Use the seller’s existing credit and you don’t need to be concerned with ratios…you can buy $10 million worth of properties this way where as when my credit was at it’s best, I couldn’t borrow more than $3 million.
Just make sure you have your exit strategy in place before you commit to buy and there are endless deals to buy ‘subject to’ at good/great prices.
Rob
R.E. Investor/Mentor
i have about 4 credit cards i am paying off, use them to rehab the last investment. The lender is telling me that the homes I have given mortgages on has risen my debt to ratio. I have 2 full time jobs and currently just opened a group home for age out of care children. i just hope i don’t miss this boom. I agree I think I should start looking for properties ranging from 10k to 20k and see what i can come up with.
Thanks to all the replied and provided support!!! Stay tune
From reports I’ve been seeing and a conversation with my banker last week, there will be plenty of foreclosures hitting the market this year. Should be at least as good (from an investor’s perspective) as 2009. If you’re talking about getting financing for cheaper properties like that, check local banks. Many of the bigger ones aren’t wanting to do anything under 50k.
Justin0419,
I am a realtor and a title producer. I have a lot of access too many of the sites. On the Mls and government, boa, wells, fifth third and others are reflecting 20k to 50k. Even 50k sounds good. If i can get my foot back in the door with minor repairs. That is my problem, once my husband and I start rehabbing we can’t stop and before you know I have to save all over again. I need to omit the theory, I want others to live like us and keep all cost of repairs down and products that I select for the apartment. Do you agree?
It can be easy to want to over improve during your rehabs. Just consider your market like how much return you’re going to get on the money you put into it, what type of tenant will be living in your property, etc. There are some things I’ll spend a few extra bucks on, while I will go the cheapest route possible on other things.
I’ll spend a little more on things like plumbing fixtures, water heaters, etc. I go the cheapest I can on things like light fixtures, ceiling fans, doors, etc.
Jersy Girl.
What a go getter! Awesome.
From your posts, it looks as if you may be overextending yourself a bit.
I would go with Rob on this one and see if you can use the existing financing via subject to, wrap etc.
Cash flow will help to. do you have some deals you can wholesale?
Even partnering up with someone who has credit/cash would take a load off you.
Partner up with them and use an option to buy them out of the deal later when your reserves are back up to par.
Also, make sure your rehabs match the hood. You can’t recoup your investment after a certain level.
Dennis