Here are the requirements of a DSCR loan for a multi-unit property (plus 4 benefits of DSCR loans).
There are a few unique requirements for a DSCR loan on a commercial or multi-unit property.
- Properties that have at least $50,000 in value or more.
- Minimum loan size starts at $1 million to $2 million.
- Units must be at least 75 to 90% occupied.
- DSCR of 1.2 or higher.
- Appraise and verify rents for each property.
This style of DSCR loan is not good for buying and fixing up value-add properties. To meet all of the requirements, the property must already be stable, rented, and bringing in rent.
4 Benefits of DSCR Loans for Commercial and Multi-Family Property
These loans not only work for commercial properties (ie, a 20-unit apartment building), but it also works for portfolios. So if you have five single-family homes you want to put under one loan, this product could also do that. The properties must appraise for $50k or higher.
Non-recourse means you don’t have to personally sign or personally guarantee it – it all goes through your LLC. So your lender won’t come after you if something goes wrong.
3. Alternative to Banks
These DSCR-style loans are helpful while banks are tight. If you don’t want to go through the hassle of a bank (or even if you can’t qualify for a bank loan), a DSCR can be a great alternative.
4. Low Hassle
A DSCR loan won’t require your tax returns, proof of income, or any of the other paperwork that typically drags out the loan process. All you need is an LLC, a good credit score, and a qualifying property.
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