Rental Properties & Primary Mortgage

Last year I bought three single family rental properties out of state. I used the same lender for all these properties and they closed in June, September and December. All properties were rented within a month of closing and I now clear $1,000/month on them. I am now considering purchasing a property for myself in NYC and went to the lender to get an idea of what I would be approved on for monthly... [more]

Last year I bought three single family rental properties out of state. I used the same lender for all these properties and they closed in June, September and December. All properties were rented within a month of closing and I now clear $1,000/month on them. I am now considering purchasing a property for myself in NYC and went to the lender to get an idea of what I would be approved on for monthly costs. I was told that they base the income/expenses on previous year tax returns. Based on my tax returns I have little income compared to expenses since last year I paid all the expenses and closing costs, but only had a few months of rental income for the first two properties. I was told this was how it was calculated and the fact that the closing costs are one time expenses and the rental income wasn't for the full year didn't matter. This resulted in me having a "loss" of over $2,500/month on these properties. Is it standard that lenders will not consider more recent information (the first six months of this year when all were rented) and only the previous year's tax returns are used? While I realize there are expenses that are needed each year so I wouldn't get the $1,000/month as additional income, it is a pretty significant difference between even being even and being negative $2,500/month. [less]