DTI at 47 on acquisition three, and every lender wants something different

juniper, there's one set of agency rules and then every lender adds its own conditions on top, and there's genuine room for judgment in how rental income gets documented. That's why the same borrower gets three answers.

anchor, 8k behind three properties with a sewer line already in your history is the part I'd refuse. Not because 47 is a bad number, because 8k is a bad number. One furnace in January and you're putting a roof on a credit card at 24 percent, and then your DTI for property four is worse than it is today. The strategy's whole advantage is that it's patient. Eight months is nothing against a twenty year hold.

The three different answers reflect a real distinction in how rental income can be documented, and knowing which one applies to you matters more than the DTI figure.

When a property has been rented long enough to appear on a filed tax return, underwriting generally works from what the return shows, adding back depreciation and certain non-cash items. When a property has no filing history, the lender typically relies on a lease and an appraiser's rent schedule, discounted for vacancy. Which path a given property falls on is a function of its filing history, not of how good the property is. Property one has two years of returns and will most likely be evaluated on them. Property two has none, so a lease-based approach is the usual route. That is why LO A and LO B disagree, and both may be applying the rules correctly. Reserve requirements per financed property are a separate lender-level condition and they do tighten as portfolios grow. Get each lender's requirement in writing, because these details change and vary by program.

On the numbers as posted: the depreciation add-back is worth checking before you assume LO A's number is punitive. If you claimed significant depreciation on property one, the return-based figure may come out closer to the lease-based one than you expect. Ask LO A to show you the worksheet.

The risk in the 8k version is concentration of timing. You would be closing a purchase, placing a first tenant in property two, and moving yourself in the same 60 day window, with no cushion for any of the three going long. Vacancy on property two while you carry a 2,410 payment and a new 355k payment is the scenario to price. At 8k of liquidity that scenario is about three months from a forced decision.

A tax professional should size the depreciation question for your specific returns.

The line that stood out to me is that property two rents for 2,500 to 2,600 against a 2,410 payment. That's a 100 to 190 spread on a property you have to place a tenant in, on a schedule set by your purchase closing. That is the weakest link in the whole file and it's the one you're most likely to compromise on. When you need a lease by a date, you take the applicant in front of you.

I did exactly that on my fourth. Took a tenant with a 611 score because I needed the lease for the next loan, and got 14 months of partial payments and a filing. Cost me more than the loan was worth.

orchard and thicket are both saying wait, and I mostly agree, but not for eight months and not for the reasons given. Kill the car note and the eight months does two things at once, it drops 480 of monthly debt and it lets property two season into a filed return. That's a different file, not a slightly better one.

What I'd actually push back on is LO C. Six months reserves per financed property isn't a rule everybody applies the same way, and if you've only talked to three lenders on a file this specific you haven't finished shopping. Talk to two more, and ask each one to put the reserve requirement and the rental income method in writing before you pay for an appraisal.

355k on 118k of income is where I'd stop and look at what you're buying rather than how you're financing it. At my price points a 355k purchase would be three houses. I know the strategy pushes you toward owner-occupant pricing on ordinary houses, and that's the trade, you take retail pricing for the financing. But a house that thin on day one takes years of rent growth to become anything, and you're funding those years out of 8k.

Waiting eight months costs you one acquisition cycle. Running out of cash on three properties costs you a property and your ability to borrow for years. That asymmetry answers it for me.

I'll be the one who asks the unglamorous version of the question. What is the 335 a month on property one and the 130 on property two actually for? You've got two properties producing maybe 465 of spread before any repair, your car note is 480, and you're contemplating a third. When does this start paying you instead of asking you for money? I'm not being snide, I'm trying to understand the timeline, because I'm looking at the same strategy and the thing I want is income without a second job. Right now this looks like a second job that pays negative.