Obtaining mortgages for investors that own numerous properties has become a challenge. Most of the time it’s their tax returns that present the biggest obstacle. Like all small business persons, investors take advantage of legitimate tax laws to minimize their tax liability and maximize the return on their investments.
Now I’ve been analyzing tax returns from a lending view point for some 30 years and have a pretty good handle on how this creative tax accounting (and I don’t mean that in a bad way) works. Most tax returns show losses on these investment properties such that bottom line income does not show the income lenders need to qualify them for a mortgage on the next property. It’s a matter of ripping apart the returns and adding certain items back into income, such as depreciation. These depreciation numbers can be some serious dollars. They can take someone from not being able to get a mortgage to someone that qualifies with very little difficulty.
In addition, most lenders have guidelines that prevent them from doing a new mortgage for anyone that owns more than 4 properties. I get referrals from business partners all the time seeking help. They know that I am fortunate to work with a number of lenders that will do mortgages for folks that own 10 properties.
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It’s this combination of experience and resources that have helped many investors expand their real estate portfolio.
