How do people maintain a low DTI ratio?

**wildert** · 01-26-2009, 05:36 PM

I know people that say they own 20 investment properties, and I know they don't have CEO incomes. I've read you need a DTI below 50% in order to keep getting mortgages, how do people do it? If I rent my place for more than my mortgage it would still raise my DTI too high to get another property.

**duckwall** · 01-26-2009, 06:41 PM

don't have a lot of loans

Kirk Duckwall Realtor
Northern MN

**donrock** · 01-26-2009, 11:34 PM

Incorporate or form a LLC and put the properties in them. If you have a property that cash flows it will help your DTI rather than hurt it.

Good luck,
donrock

**Mike Taylor** · 01-27-2009, 01:58 AM

Lenders will factor in rent, or at least a portion of it, as part of you DTI. Investor loans are pretty hard to get and have lot of requirements nowadays.

**jpoey** · 01-27-2009, 04:15 AM

why dont you ask a bank or mortgage company who can give you the best answer; also lower your debt and raise your income, llc and corps are for personal protection

**BSS2T** · 01-28-2009, 06:22 PM

I have dealt quite a bit with flow through entities such as partnerships, s corps and LLCs. Most of the time, unless the business entity has its own cash flow record and credit history, the "owner" of the entity still has to sign personally for the debt. The entity switch wont help you here. Also you had better be REALLY careful before you start putting real estate into corporate umbrellas. If you change the asset from personal, into corporate, and back to personal you will be taxed like you won't believe (at least with c corp). Basis in the property will change and the gain must be realized.

When you have a lease agreement, a large portion of that montly payment debt is disregarded. It used to be 85% but I am not sure what it is now.. so for example, if you had a 1000/month mortgage on a rental that has a lease agreement attached to it for 1200, then the 1000 is just about washed away from DTI.

Brad.