70% of REI Investors Lose Money Because of THIS

I have been in real estate investing for 23 years. Within that time I’ve seen 70% of new investors lose money within the first year. Many of them purchase real estate courses for $10K to $30K in hopes of learning all of the tips and tricks. Blinded by the promise of instant success, many people don’t take the time to set themselves up properly. On the other hand, those who take things at a slower pace and follow a few simple steps, will have a better chance of winning. How can you avoid becoming part of the 70% of investors who lose money? Let’s take a closer look.

Simple steps to success.

First and foremost the most important thing that you need to focus on as a new real estate investor is taking simple steps. This includes looking at properties, finding people who can send properties to you, and securing the money you need. Here at The Cash Flow Company we recommend that you look at 200 properties, talk to 100 wholesalers, and talk to 100 lenders before you jump in to your first purchase. Those who are focused can get everything set up in a matter of weeks. While others may take longer to get set up because they can only set aside a few hours a day. By taking the time to consume and understand everything, you will set yourself up for success

Make money instead of lose money! 

Some seminars can be beneficial to real estate investing, however, that is not normally the case. Many people become wrapped up in the idea of investing without understanding all of the factors that come into play. While it’s not rocket science, you do need to work hard to set yourself up for success. Those who are new to real estate investing often get talked into taking courses. These average $10K to $30K and focus on how to fix and flip quickly and easily. Not only do you have to pay for it using credit cards, but you are encouraged to use their credit cards as well. This get rich quick method causes many to lose steam quickly because they are not talking to people in the business or looking at enough properties. While this method may work for some, it doesn’t work for most.

Take your time 

Surprisingly 70%  of REI investors lose money because they dive in before going through the simple steps. In doing so, investors often lose $20K to $30K, which in turn prevents them from purchasing their next property. Successful real estate investors ensure that they have 1 to 3 good deals before moving forward in purchasing more properties. Just to clarify, a good deal is one that makes money! Real estate investing is all about making money so that you can live the life you want!

Contact us today to learn more about the simple steps you need to take to be successful in real estate investing. 

Watch our most recent video 70% of REI Investors Lose Money Because of THIS to discover how to get on the right path to success.

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How to Compete in Today’s Real Estate Market (2024)

In the past few days we have had 4 clients who lost properties that would have been really good flips. The reason that they lost the deal was because they didn’t secure financing beforehand. While getting into this business requires a lot of planning, it is imperative that investors set up their money correctly from the very beginning.  Those who do will be able to compete in today’s market and have more opportunities for the best deals! 

New investors prepare!

Those who are new to real estate investing should focus on setting up the proper financing immediately! The last thing that you want to do is to put a property under contract and not close . This could burn the relationship that you created with the realtor or wholesaler. Instead of being at the top of their list for good properties, you will instead move to the bottom of the pile.  Here at The Cash Flow Company we want to give you the competitive advantage. Part of that is making sure that you do everything correctly. It is a business! As a business it is important that you get pre-approved for the loans you need. 

Don’t miss out on deals!

Oftentimes real estate investors miss out on amazing deals because they are not prepared. Whether you are new or just into a new adventure, it is important to set yourself up for success from the beginning. If you are going to get into the real estate game, make sure that you are not only looking for properties, but that you are also keeping the money flowing. What do we mean by keeping the money flowing? Maybe you need 100% financing, need a second, or you’re new to flips and need to know what to do. By talking to lenders as you find properties and getting pre-approved, it will help you to move forward quickly on deals. 

Choose the right lender for the deal.

One of the most important things that you need to do as a real estate investor is to create a good relationship with lenders. Those who have a good relationship with their lender will be able to consult with them prior to purchasing in order to see what financing options are available. One thing to keep in mind is that your lending needs will not only change over time, but they will change depending on the property. For example, financing on a fix and flip will be different from the financing on a rental property. It is important to look around and evaluate your lending options annually in order to find the best options for you. 

How do you get pre-approved?

Before seeking out a pre-approval, it is imperative that you know what type of property you are looking for. Are you going to focus on flips, rentals, 1 to 4 units, or multi units. Those who do can then make sure that the lender lines up with what they are trying to do. By getting pre-approved can help you go into a deal with reassurance. How can you find the right lenders? The answer is by talking to those in the real estate community. They can guide you to the lenders who are closing, those who work with new investors, and also tell you about requirements that the lenders might have. 

Get the competitive advantage.

As you talk to lenders it is important to consider what their requirements are, and areas that you need to focus on. While one lender might require more money down, another may require a higher credit score. Find out all of the steps that you need to complete in order to guarantee pre-approval. Just to clarify, these steps can be done in conjunction with looking at properties. For example, you can work on improving your credit score or look for private money options while searching for properties. By taking your time to work through the process, you will have a competitive advantage.

What is gap funding?

Gap funding is borrowing money from someone for the down payment, carry, or any money that you have to put into the deal. When you are buying a property, the first lender requires something in order to approve the loan. This could be a down payment, reserves for payments, or they may require you to do the fix up. Many investors don’t have the additional funds that are needed in order to meet the lenders requirements. Real estate investors might go out and find a family member, friend, or someone in the real estate community who can lend them that money to bridge the gap. It is important to make sure that your primary lender allows gap funding before purchasing a property. If the lender doesn’t allow gap funding, it could jeopardize the deal. 

How do you find gap funding?

There are a lot of people out there who have anywhere between $10K to $50K that they are looking to invest. By working with you, they have a chance to receive a better return on their investment. So how do you find gap funding? There are real estate groups throughout the community that provide opportunities for investors to meet. While peer investors are not often interested in diving into real estate themselves, they are interested in getting a better return on their money. While you can start by asking family and friends, many fear that it will create an awkward situation. By finding peer investors in the community who have $100K or $200K set aside, you will be able to compete in today’s market!

Ready, set, GO!

One of the biggest hurdles in real estate investing is finding the funding you need to purchase properties! Thankfully there are a lot of options out there to help investors. These include HELOCs, credit cards, and peer lending, just to name a few. Here at The Cash Flow Company we have seen people use multiple ways to get the gap covered. Those who take the time to gather pre-approvals, will be ready to go when the next deal comes!

Contact us today to find out more about gap funding and what you need to do to get pre-approved.

Watch our most recent video to learn How to Compete in Today’s Real Estate Market (2024).

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How to Buy 5-10 Properties with Little to $0 Down

Today we are going to talk about how real estate investors can buy 5 to 10 properties with little to none down. While this may be difficult in some markets because of the price points, real estate investors are still finding good deals in smaller communities. Within these smaller communities and smaller markets, there is the opportunity to find properties at 50¢ to the dollar. How can you buy 5-10 properties with little to $0 down? Let’s dive in!

Great deals can create excellent opportunities.

Here at The Cash Flow Company we recently helped a couple in a small town in Oklahoma to purchase 8 properties. They have since rented out all 8 properties and refinanced 5 of them. As their lender, we not only liked the properties that they were purchasing, but more importantly what they were doing with them. This allowed us to finance more and even all of it in some cases. Once the couple rolled the property into a long term loan, they were able to pay off the loan with us. Now the couple is getting ready to purchase 5 more properties. This is just one of the many examples of how buying great deals can create excellent opportunities. 

 Every lender is different.

Every lender has their own requirements, so it is important to set things up correctly and do it right. In doing so, the lenders who like the numbers and the leverage will be able to finance 100% for both the purchase and the rehab. Once the property is rented, then it can be refinanced, lenders paid off, and the real estate investor has nothing in. It is important to be flexible on where you look as well. In the Denver market for example, it could take 3 to 5 years to find 5 properties. As far as lenders, the majority of lenders will require 10% to 20% of your own money. Start by  finding properties that are 70¢ to the dollar and below. This will create a better opportunity for funding. Take your time and do your research!

Buy now to take advantage of rate drops later.

Real estate investors who are able to purchase now and hold them for a few years will have a huge advantage. Predictions indicate that interest rates are going to decrease over the next few years. When they do, real estate investors will have the opportunity to refinance. This will allow them to take advantage of the lower rates and increase their cash flow. By purchasing undervalued properties right now and at least breaking even, then in a few years when rates go down you will be in a great position. Not only will you have a lot of equity, but you will also have cash flow for the property.

Example of how decreasing rates increase cash flow:

Property has a $400K mortgage with rates at 7%

The current monthly payment is around $3000

In a few years when rates go down to 5%

The current monthly payment will go down $500 to $1000 

This will increase the monthly cash flow for the investor. 

While the property might just break even right now, the rate decrease will provide cash flow in the future.

Example of exponential growth for the future.

Property that is $400K can be purchased for $350K right now

In a few years, it will be worth $450K to $500K

If you were to buy ten of those properties at $350K and put in $50K into each property. 

This would total $500K in rehab costs.

In a few years each property would be worth $450K or $500K. 

You can use this money as leverage.

 Buy now to create wealth later.

Those who are able to purchase properties now that are under market value will set themselves up for wealth later. If you are able to break even or tread water in this current market, then when the market takes off you have the opportunity to create cash flow or wealth. Now is the time to buy 5-10 properties with little to $0 down so that you can open the doors to endless possibilities over the next few years.

Watch our most recent video about How to Buy 5-10 Properties with Little to $0 Down.

Contact us at The Cash Flow Company to discover your options for fix and flip investment opportunities and BRRRR loans.

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Peer to Peer Lending: How to Win Big in Real Estate Investing

How can you win big in real estate investing? The answer is peer to peer lending or other people’s money. Throughout the past 12 years we have done business with a lot of people using OPM, also known as other people’s money. What is other people’s money? It is finding people within the community who have money that they want to invest. In using this form of leverage, it not only provides the funding you need, but it also gives the peer lender a better return on their money as well. Let’s take a closer look to see if OPM can help you win big in real estate investing!

Don’t let financing restrictions keep you down!

Over the past few years the Fed has been tightening things up, causing the lending pools to shrink. This is where OPM can help real estate investors. It can provide the funding they need without having to navigate the bank’s restrictions and increasing requirements. Just to clarify, OPM and peer to peer lending have been around since before banks were established. By going back to the basics you can get the funding you need to win big in the long run!

OPM can benefit everyone! 

Within our community, there are a ton of people who are looking to do something better with their money. Nowadays neither the stock market or banks are providing good returns on investments. By becoming an OPM lender or a peer lender, you have the opportunity to get 10% back on your investment as opposed to 5% from traditional methods. Real estate investors also benefit because they can not only fill their liquidity buckets for current projects, but future investments as well.

Follow the golden rule to succeed in this game!

It is important that you follow the golden rule when working with OPM lenders. The relationship can either be a positive one or a negative one depending on how prepared and honest you are. Real estate investors need to have everything set up correctly, ensure the deal is secure, and most importantly form an honest relationship with their OPM lender. In doing so, real estate investors will set themselves up for success.

What can OPM be used for?

Other people’s money or peer to peer lending can be used for anything and everything! Whether it’s for a down payment, fix up costs, or just setting money aside for a rainy day, there is something for everyone. As long as you set everything up correctly, this form of lending provides an easy and low risk option for not only the investor, but the peer lender as well. Whether it’s a portion of a project or an entire purchase, OPM provides the flexibility real estate investors need.

Now is the time to set yourself up to win! 

Peer to peer lending has something for everyone! This low risk option provides the flexibility you need to win in real estate investing. With confidence and a secured deal, the sky’s the limit to your success. Here at The Cash Flow Company we strive to help investors reach their investing goals. Contact us today to find out more about other people’s money and how you can get on the fast track to success.

Watch our most recent video, Peer to Peer Lending: How to Win Big in Real Estate Investing to find out more.

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How to Protect Your Peer Lenders

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How to Protect Your Peer Lenders

Today we are going to discuss peer to peer lending, as well as how to protect your peer lenders. What is peer to peer lending? To put it briefly, it is one person lending to another person. By working with people within the community, it helps others who want to make better returns on their hard-earned money. More importantly, it helps you achieve your investment goals quickly! 

There is something for everyone.

There is something for everyone with peer to peer lending. Whether it’s $5,000 to $3,000,000, someone in the community has the money you need. For example, funds can be used for down payments, fix up costs, small business start up costs, and even used to cover the entire project! This form of lending provides more flexibility, simpler underwriting, faster closing, and no prepayment requirements. It’s an excellent option for real estate investors. 

How can you guarantee success? 

It is important that real estate investors protect their peer’s money by putting them in secure deals. To clarify, a secured deal is with real estate and cash flowing. The first step in creating a secured deal is closing with a Title company and proper paperwork. This protects both the real estate investor, as well as the peer, to ensure everything remains honest.  Most importantly, don’t gamble with your peer’s money. Pay them back as agreed and be truthful. In doing so it will establish a positive relationship that will ensure future deals. By doing these things, you’ll create a win-win situation. 

Make the lending switch today!

Ultimately, every investor needs peer to peer lending! It’s a fast, cheap, and dependable funding option! 

Contact us today to find out how you can win in the real estate game.

Watch our most recent clip to find out more!

 

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NOW is the Most Valuable Time to Invest in Real Estate Investing

Now is the time to invest in real estate! As the Fed is tightening up and banks are lending less, it creates better deals for real estate investors.  There are going to be good deals coming up that will help you to not only create the income you need but the generational wealth you want. By getting into it now and understanding the different components, it will help you in the long run. This includes setting up your realtors, finding deals, and calculating ARV. Now is the most valuable time to invest in real estate! Don’t miss out on this opportunity!

If things are tightening up, why does that create more opportunities?

When the Fed shrinks the money pool, it in turn decreases what’s available for everyone. This causes lenders and banks to swim upstream in order to look for the best of the best. Banks are being pushed to the point that they can only lend a portion of what they could before. Let’s take a closer look at the money side as a customer, and as an investor, to explain why these times are creating more opportunities. The customers are the ones who own their homes and are going to give it up for a discount. While investors are looking at the property as money to invest. Once again, leverage is the key to real estate investing and why we can make money from nothing. Anybody can do this and create generational wealth if you are set up correctly and financially prepared

How lending has changed.

One of the largest private lenders used to lend on ARV. ARV stands for after repair value. Lending based on ARV allows investors to get more money, create more leverage, and buy more deals. So if you’re in real estate investing you need to focus on purchasing undervalued properties, fix them up, and either keep it or sell it. This will in turn create wealth for you to reinvest in another property. In today’s market however, lenders are lending off of LTV, or loan to value, instead of ARV. This is often a $50K to $75K difference from what they were lending before the market changed. 

Let’s look at an example of ARV vs LTV

Purchase a house for $250K with a rehab of $50K
Worth when all said and done Percentage Amount they will lend Amount lenders  want you to put in 
ARV $400K $400K at 75% Close to $300K 10%
LTV Lenders don’t looks at this  $300K at 75% Close to $225K 10% to 30% 

It is clear to see what a big difference it makes when lenders switch from ARV to LTV. They are becoming tighter on their lending, lending less, and charging more. This creates a smaller pool of investors, because many can no longer qualify for those deals. While the deal flow might remain the same, only 20% to 30% of investors are prepared to continue buying in this market. There are going to be better deals for those who can buy and buy quickly.

Now is the most valuable time!

It is one of the most valuable times to get into real estate investing. This is because the Fed is tightening up and banks are starting to lend less. In doing so, it creates better deals that will in turn create wealth and income in the near future. One of the most important things to remember is that when there is fear in the street, that is when people start running. These are the times when you need to make your move. Make sure that you have some money available, a good credit score, and a good business history to ensure that you are a client that is attractive to lenders.

At The Cash Flow Company we can help you find the funding you need and guide you through this market. 

Watch our most recent video to find out more about why NOW is the Most Valuable Time to Invest in Real Estate Investing.

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How to Get Wholesalers to Email YOU!

 Today I would like to share with you what I’ve learned over the past 23 years while working with successful investors. These investors have learned how to grow their wealth quickly and easily by working smarter, not harder! What exactly does that mean? To put it briefly, they work smarter by getting on the wholesaler’s “A” list. As a result, they can find incredible deals without scouring the internet or contacting realtors. Find out how to get wholesalers to email you today! Let’s get started!

Finding good wholesalers

First and foremost, you need to find wholesalers without doing endless internet searches or asking other investors. Investor Lift is a user-friendly website that can help you build a wholesaler network quickly. This website allows you to find the majority of wholesalers in your area by simply clicking on the property. More importantly, you to find the contract information including their email and often a phone number as well. In as little as 10 to 15 minutes you can be emailing wholesalers and getting deals sent directly to your inbox.

  1. Create an excel spreadsheet to copy and paste the wholesalers information into.
  2. Go to Investor Lift at  https://investorlift.com/ 
  3. Sign up for a free account by clicking Register in the upper right corner.
  4. Select the State that you are searching in.
  5. Click on a Property that you are interested in.
  6. Select Contact to see who is selling the property.
  7. Copy and Paste the email and phone number in your excel spreadsheet.
  8. Build your List by going through each property and adding to the excel spreadsheet.
  9. Add Properties to your excel spreadsheet daily.
  10. Send them an email sharing what types of properties you are looking for.
  11. Follow up weekly to see what they have available.
  12. Go to the properties you are interested in.

Get on the “A” list!

Establishing a good relationship with the wholesalers is the key to success! Of course it may take 30-60 days to create the relationship. However, it is important to show that you are an active buyer and a good buyer. As a result, investors will receive property information before it is added to the website. Ultimately wholesalers want investors who know what they are looking for in order to have properties purchased quickly.

Keep a watchful eye.

In a nutshell, you will find both good and bad wholesalers during your search. With this in mind, it is important that you keep a watchful eye out for the bad wholesalers. A bad wholesaler for instance is one who tend to advertise overinflated properties, or properties that have under-inflated fix up costs. Focus your attention on the good wholesalers who have good deals in order to set yourself up for success.

Work smarter not harder!

Build wealth quickly and easily by getting on the wholesalers’ “A” list! In doing so, it creates an easy way to get the cream of the crop before the properties post on the websites. Stop wasting your time looking at 30 to 40 properties a day by using Investor Lift. In addition to finding properties, it is important to find the right financing as well. Here at The Cash Flow Company we can answer your questions and find the right product for you. Reach out to us to find out more about financing flips, BRRRR, bridge loans, and gap loans. We would be glad to walk through any deal that you have and see how we can make it even better.

Watch our most recent video to find out more about how to Get Wholesalers Emailing YOU! 

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Why You Should Use Peer to Peer Lending

Today we are going to discuss what peer to peer lending is and why should you use it. As a result of all of the changes that have happened in the market over the past few years, real estate investors are looking for alternative funding. It is an excellent option that not only allows you to work with people in the community, but it creates flexible funding for your next deal. Let’s take a closer look at why you should make the switch! 

Removing the middle man.

Peer lending has been around for centuries, long before formal banks were established. Nowadays banks are increasing their requirements and shrinking their lending pool. In doing so, real estate investors are searching for alternative funding that is flexible and simpler. By using this form of lending, real estate investors no longer have to worry about meeting bank requirements. Instead, it removes the bank entirely and reintroduces the human factor. 

There is something for everyone.

There is something for everyone with peer to peer lending. Whether it’s $5,000 to $3,000,000, someone in the community has the money you need. For example, funds are used for down payments, fix up costs, small business start up costs, and even used to cover the entire project! This form of lending provides more flexibility, simpler underwriting, faster closing, and no prepayment requirements. It’s an excellent option for real estate investors. 

Make the lending switch today!

Every investor needs peer to peer lending! It’s a fast, cheap, and dependable funding option! 

Contact us today to find out how you can win in the real estate game.

Watch our most recent clip to find out more!

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2024 Real Estate Investing: Are High Interest Rates Worth It?

Today we are going to discuss real estate investing and whether or not it’s worth paying high interest rates in 2024. Over the past few years there has been a huge shift in the market. The banks are swimming upstream in search of the best and investors are having a difficult time qualifying for financing. While many people may run away from investing right now, this is actually the best time to jump in. Those who do will benefit greatly when rates go back down. What do you need to do to ensure success? Let’s take a closer look.

1. Focus on the lower end of the market.

With interest rates being so high right now, it is important that you focus on the lower end of the market. What do we mean by the lower end of the market? These are homes that are in the $300K range as opposed to $500K or above. It is important to keep affordability in mind as well if you are flipping a property. Affordability is key because someone will need to be able to afford to buy the house when you are finished. 

2. Create a good product to guarantee a sale.

Especially for those who are fixing up properties, it is crucial that you have a nice fixed up property to sell. It is more likely that a fixed up property will sell, as opposed to one that needs work. In today’s market there is an inventory shortage for investors and a growing demand for properties. If you are at a good price point and have a good product, then you will win in this real estate game.

3. High interest rates now will create cash flow later.

Keep in mind interest rates and how they will affect your monthly budget. Properties that will at least break even, or better yet cash flow, will create wealth in the near future. Predictions are indicating that rates will come back down later this year. When they do, more people are going to jump into the market. Many people have been waiting on the sidelines for things to go back down. By buying now, you will be ahead of the crowd with a property that is worth more, thus creating more cash flow! 

4. Do it correctly to prevent being upside down.

It is a great time to jump in! If you can buy something low and make it work now. Then when rates go back down, you are creating that wealth.

Purchase Price Overpaid  Two years from now Equity 
A few years ago $350K $100K $325K to $350K $0
Today $250K $0 $325K to $350K Created equity

5. What is a good property?

In order to succeed in this market it is very important that you buy good properties. What is a good property? It is one that is not on corners, busy streets, or near a commercial area. A good property on the other hand is one that is in culdesac or near parks. These types of properties are what you should be focusing on to ensure success. 

6. Why should I get into real estate when others are running away?

All of the negativity out there is keeping people out of the market an driving away those who have been in real estate for awhile. In years past there were some really good deals available and it was easier to qualify for lending. Nowadays, the banks are swimming upstream in search of the best of the best. This decrease in competition creates the perfect opportunity for new investors to begin their real estate investment journey. 

7. Set yourself up for success!

As a new investor you need to make sure that you set yourself up for success. Those who stand out to lenders and have more buckets of money will set themselves up for success. Real estate investing is all about using other people’s money in order to create wealth. Contact us today to find out more about getting your lending buckets set up!

There is going to be less real estate investors and less money out there. However, there are going to be more deals than there were before. These deals will have better margins and will create a greater opportunity for wealth in the future. Contact us today to find out more!

Watch our most recent video about 2024 Real Estate Investing: Are High Interest Rates Worth It?

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Interest-Only vs Amortization Loan: Calculating Mortgage Payment

In today’s market it is important to find a loan not only flexible, but one that also helps you to create cash flow. Today we are going to compare interest-only loan vs amortization loan by using an example. This will paint a picture of how these two types of loans differ. Which is best for you? Let’s dive in and see!

What is the biggest difference between interest-only and amortization?

Interest only loan products are loans where you are only paying on the interest that is owed on the loan. The principal on these types of loans never goes down unless you decide to put a  little money towards it. An amortized loan on the other hand requires you to pay not only the interest, but a little bit towards the principal as well. In this market, the rates are a little bit higher than they have been in years past. While an amortized loan typically has lower rates, it will also have the principal added to the monthly payment.

Example:

Loan amount: $200K

Rent: $1,700

DSCR ratio 1.1 

Loan Type Rate $200,000 x rate = annual interest Annual interest ÷ 12 = monthly payment Payment amount to mortgage company Taxes, Insurance, HOA, and Flood = $150.00

Creating Grand total for the month

Interest Only 8.25% $16,500 $1,375 $1,375 $1,525
Amortized 8% $16,000 $1,333 $1,333 Interest + principle = $1,468 $1,618

One more step. Adding the DSCR ratio.

What you will normally find is that the interest only rates in this market will be a little higher than the amortized loan rate. However, we still have one more step before we can determine if you can qualify for the DSCR loan on this property. We will need to multiply the grand total for the month by the DSCR ratio. This will help us to determine if the property will qualify for a DSCR loan based on the current rent amount of $1,700. Just as a reminder, the rents are based on what is happening in the market and the assessments done by an appraiser.

DSCR ratio 1.1 Grand total for the month  Grand total for the month x 1.1 = Difference after adding the  DSCR ratio compared to the $1,700 rent
Interest only  $1,525 $1,677.50 Will qualify for DSCR
Amortized  $1,618 $1,779.80 Will not qualify for DSCR

If you have any questions or want to run though the DSCR numbers, contact us today. We can help you compare a DSCR loan to an amortized loan. This will help you determine which is a better fit for your needs. 

Watch our most recent video to Discover Your Best Option: DSCR Loan – Interest Only vs Amortized.

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