Tag Archive for: DSCR loan

DSCR Loans: Single-Family Units vs Multi-Units

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What is the difference in DSCR loans: single-family vs multi-units.

A DSCR loan is a product that does not rely on income from the borrower or borrowing entity. The borrower could be an individual, an LLC, or a partnership. Regardless of who is borrowing, the lender does not require their income information.

Instead, a DSCR loan depends on the income (rent) from the property.

Traditionally, DSCR loans are used for single-family properties. However, there are products available for multi-family units as well. Here are some of the similarities and differences.

Ratio Requirements for a DSCR Loan

Debt service coverage ratio is the rent divided by the expenses of a property. If the DSCR is 1, that means the income perfectly covers the expenses, breaking even.

A DSCR loan for commercial property will likely require at least a 1.2 DSCR. This would mean your income is 120% more than your expenses.

For instance, if your mortgage, interest, taxes, and insurance add up to $1,000 per month, your rent must be $1,200 per month to have a DSCR of 1.2.

Differences Between DSCR Loans in Single-Family vs Multi-Units

There are some differences between a typical DSCR and a DSCR-style product for multi-family and commercial properties.

  • Loan size. The average DSCR loan is for single-family units, duplexes, and fourplexes, usually around $300k to $400k. A DSCR loan for commercial property, however, is a larger loan – typically anywhere between $1 million to $2 million.
  • LTV. For a typical DSCR loan, you could get an LTV of 80-85%. Commercial DSCR loans max out at 75%.
  • Terms. A DSCR loan for commercial property is amortized over 30 years or interest-only, like a traditional DSCR loan. They’re only fixed for a certain period, usually five, seven, or ten years.

Read the full article here.

Watch the video here:

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How to Use a DSCR Loan for Commercial Property

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What you need to know about the DSCR loan for commercial property or multi-family.

Maybe you have the chance to buy an apartment unit. It could have 40 units, or just five. But what if you still want the simplicity of a DSCR loan?

Most of the time, DSCR loans are only available for single-family rentals – or sometimes up to fourplexes. However, there is a product very similar to a DSCR loan that can be used for commercial property and multi-family apartment buildings.

Let’s explore how these loans differ in terms and requirements from other DSCR loans.

What Is a DSCR Loan for Commercial Property?

A DSCR loan is a product that does not rely on income from the borrower or borrowing entity. The borrower could be an individual, an LLC, or a partnership.

Regardless of who is borrowing, the lender does not require their income information.

Instead, a DSCR loan depends on the income (rent) from the property. A debt service coverage ratio is the rent divided by the expenses of a property. If the DSCR is 1, that means the income perfectly covers the expenses, breaking even.

Ratio Requirements for a DSCR Loan

A DSCR loan for commercial property will likely require at least a 1.2 DSCR. This would mean your income is 120% more than your expenses.

For instance, if your mortgage, interest, taxes, and insurance add up to $1,000 per month, your rent must be $1,200 per month to have a DSCR of 1.2.

Differences Between the Types of DSCR Loans

Let’s look at the differences between a typical DSCR and a DSCR-style product that is used for multi-family and commercial properties.

  • Loan size. The average DSCR loan is for single-family units, duplexes, and fourplexes, usually around $300k to $400k. A DSCR loan for commercial property, however, is a larger loan – typically anywhere between $1 million to $2 million.
  • LTV. For a typical DSCR loan, you could get an LTV of 80-85%. Commercial DSCR loans max out at 75%.
  • Terms. A DSCR loan for commercial property can be amortized over 30 years, or it can be interest-only. But they’re only fixed for a certain period, most commonly five, seven, or ten years.

Requirements for Commercial Property 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 a DSCR Loan for Commercial and Multi-Family Property

  • Portfolios

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

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.

  • 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.

  • 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.

More on DSCR Loans

A DSCR loan could be the right fit for your single-family, multi-family, or commercial property.

Left with questions about DSCR loans? Check out these videos.

Want more info for your deal or portfolio? Reach out at Info@TheCashFlowCompany.com.

Not sure your property’s DSCR qualifies? Use this free, simple DSCR calculator.

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DSCR Loans and LLCs: Beware of This Major Roadblock

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Learn from this mistake: an important lesson about DSCR loans, LLCs, credit, and partners.

DSCR loans are a great option if you need a loan in an LLC’s name.

However, there’s a major risk to be aware of when you look for financing under your LLC’s name.

Let’s walk through what recently happened to a client whose credit score dipped… and a big secret was revealed.

Credit Usage Can Impact Your Loan Terms

This client was quoted by another company for a DSCR loan:

  • 9% interest rate
  • 3 origination points
  • On a cash-out, 70% refinance of a remodeled, rented property.

Doesn’t that seem high?

His main hurdle was that his credit score had dipped during the remodel of this project.

He started with a score of 720 and a credit limit of $35,000. To get the property rent-ready, he used $30,000 of this credit. This caused high credit usage – which dragged his credit score down to a 679.

This plummet in score cost him a couple of points in interest and origination, resulting in a much more costly refinance than he was prepared for.

How to Fix Bad Credit as a Real Estate Investor

To get his score back up, we helped him with a usage loan.

This means:

  • We gave him a private loan.
  • He used it to pay off his credit cards.
  • Paying off the credit cards lowered his usage.
  • Lower usage raised his credit score.

When usage is the reason for your low credit score, a small short-term private loan like this can be a solution.

In our client’s case, this higher credit score refreshed the refinance DSCR he was quoted to a 7.625% interest rate, with a half-point origination, on a 30-year fixed loan.

WAY better. Until he dropped a bomb on us…

DSCR Loans and LLCs

This client told us he owned the property. All the properties were his. Then we got to ordering the title…

And the property was under an LLC. No problem! DSCR loans are great with LLCs.

Then he mentioned that he has a partner. And the partner owns 40% of the LLC. And his partner’s credit score was even worse than his.

Depending on the lender, a partner has to own a certain percentage of the LLC before their credit score matters. For some, it’s a minimum of 5% ownership. For others, it’s 50%. 

In this case, at 40%, we look at the lowest credit score in the LLC to determine the loan rate and LTV.

 

Be warned: if your financing is under an LLC, you can get quoted one set of terms, but once it comes down to it, your partners’ credit scores can make the actual terms worse. Don’t let this catch you off guard.

Be careful not only with your own credit – but with the credit of everyone in the LLC.

How to Fix a DSCR Loan When Your LLCs Partner Has Bad Credit

In this client’s situation, we’re going to try another solution, but it will take much more time.

We’re going to move this partner off the LLC while we do the usage loan. Then give it a month or two until the lender can see that it’s only the client’s name, with no partner.

There are hurdles this way. But there are always ways to get through it.

Keep this in mind when you put LLCs together for real estate investing. You might want one person with great credit and one with great experience, but however you piece it together, make sure you’re upfront with your lender. Being open about the LLC at the beginning can prevent roadblocks down the road.

Help with DSCR Loans, LLCs, and Other Investor Loans

If you have any other questions on DSCRs, fix and flips, or any kind of loan in the investor world, we’re happy to help.

For more info on real estate investing, you can check out our YouTube channel. You can also reach out directly at Info@TheCashFlowCompany.com.

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What Should Your Income Look Like for a DSCR Lender?

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5 important things to know about DSCR lender income requirements.

Compared to lenders of conventional loans, any DSCR lender will have unexpected guidelines when it comes to income. The qualifications they need from you, plus the kind of income they need from your property is unlike any traditional loan.

Let’s go over 5 key points about DSCR lenders and income.

5 Things To Know About a DSCR Lender & Income

1. YOUR Income

DSCR loans are best for borrowers whose current income over the last two years doesn’t qualify for either a conventional loan or a loan from a local bank.

If your tax returns are low over the last two years, that’s where a DSCR loan might come in for your rental property.

2. Business History

Many real estate investors are new, so they don’t have two years’ worth of tax returns for their business.

With DSCR loans, the length of your business does not matter. You could have opened the LLC the morning you close on the loan. Banks need your business information because they’re lending based on you. DSCR lenders don’t because they’re lending based on the property.

3. Employment Gaps

In the same vein as the first two items, DSCR loans are great for people who just changed jobs, moved, or haven’t had a continual work history for the past two years.

A conventional bank won’t be understanding about career shifts or gaps in work. But they won’t impact your ability to get a DSCR loan.

4. Investing History

Traditional lenders can be hard on new real estate investors. They want to see past successful projects in order to trust you. DSCR loans, though more designed for investment properties, don’t care about your past real estate investing history.

5. Cash Flow on a DSCR Loan Property

To get a great DSCR loan, the rental property must cash flow. While there are some DSCR loans available for negative cash-flowing properties, you’ll only get the best rates and terms when you have positive cash flow.

Read the full article here.

Watch the video here:

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What Are the Downsides of a DSCR Loan?

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Always shop around for loans. What downsides of a DSCR loan should you look out for?

A disclaimer: you should always shop around for DSCR loans.

There is no universal underwriting for DSCR, so every lender will be a little bit different. This product is extremely segmented. So while one lender might have a deal-breaking con, another one will have all the pros you’re looking for.

That being said, let’s look at some of the potential pitfalls of a DSCR loan compared to a conventional loan.

Downsides of a DSCR Loan: Higher Interest Rate

A DSCR loan will have an interest rate somewhere between 1-3% higher than a conventional loan. Because, unlike the conventional market which is controlled by two pseudo-government agencies (Fannie and Freddie), DSCR is made up of hundreds of different investors who design these products. One lender may offer a rate of 6%, while the same client at another lender could only get 8-9%. 

 Prepayment Penalty

There are only a few states where DSCR loans don’t have prepay penalties. With a prepay penalty, there is a period (usually 3-5 years) where you must pay a fee if you want to pay off the loan. If you think you’ll want to sell or refinance the property within that time frame, DSCR might not be a cheap option for you.

For Rentals Only

DSCR loans are designed for investors with rental properties. You cannot use a DSCR loan for an owner-occupied property (aka, your personal home). These are business-based loans, so they do not follow the same standards as personal mortgages.

Credit

Since DSCR loans don’t look at your income, they do rely heavily on your credit score. Without a good score, you’ll have a hard time getting a DSCR loan (or at least one with decent rates).

Community and Loan Size

Lastly, DSCR loans aren’t ideal for smaller communities or projects. DSCR lenders typically only lend in cities with a population greater than 25,000. The lowest loan they’ll give is generally around $75,000.

How to Find DSCR Loan with the Fewest Downsides

It’s always important to shop around for the best leverage, but this is especially true for the segmented market of DSCR loans.

Not sure where to start? Reach out to us at Info@TheCashFlowCompany.com.

We work with 10-15 different DSCR wholesale companies to find the best rates, highest LTVs, and lowest credit requirements.

Read the full article here.

Watch the video here:

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The Benefits of a DSCR Loan for Investors Who Own a Rental

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How do you benefit from a DSCR loan? Why should you get one?

A DSCR loan can replace a conventional loan for real estate investors.

But what’s it all about? Let’s go over the benefits of a DSCR loan.

Benefits of a DSCR Loan vs Conventional

These loans are relatively simple:

  • There are no personal income requirements (no W-2s, tax returns, etc). Instead, it’s all based on the income and expenses of the property.
  • There are no business or experience requirements. Bank or conventional loans require a business to exist for 2 years or more before they’ll lend to you.
  • They don’t need to see your portfolio. For other loans, lenders may ask to see what other properties you’ve flipped or rented. DSCR loans only care about the rental property at hand.

DSCR loans come in all shapes and sizes (3-year, 5-year, 30-year, 40-year), with a broad variety of details depending on lenders.

What Is the “DSCR” Part?

A debt service coverage ratio loan focuses on the debt ratio of the property. Does the rent pay for the expenses?

  • Rent – The monthly income a property receives from tenants, based on comps.
  • Expenses – Despite all the expenses of a property, a DSCR loan only takes into account the mortgage payment, interest, taxes, insurance, and HOA fees.

One way to think of this ratio is: do you at least break even on this property?

To calculate a DSCR loan: Does Rent ÷ Income equal 1?

If yes, then you exactly break even. If it’s more than 1, then you have cash flow (and getting a DSCR loan will be even easier). But if this number is less than 1, the property costs more than it makes, and you’ll need a special kind of DSCR loan, likely with worse terms.

Benefits of a DSCR Loan

Let’s go over all the positives of a DSCR loan:

  • No income requirements for you – just the property.
  • It doesn’t matter how old your business is.
  • You can write everything off on your tax returns.
  • Lenders don’t consider your other properties in the underwriting.
  • You can buy in an LLC or company name.
  • They have interest-only DSCR options.
  • There is a variety of term lengths – from 3-year adjustable to 40-year fixed.
  • They can be used for short-term rentals, like Airbnb or VRBO.
  • A DSCR loan is a perfect long-term refinance loan for a flip project. It works great with BRRRR.

Read the full article here.

Watch the video here:

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What Is a DSCR Loan – and What Can You Do With It?

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When should you use – and what is – a DSCR loan?

One of the most-asked questions we get:

“What is a DSCR loan?”

Where does it fit? What can we do with it? What do we need in order to get one?

In this post, we’ll go over: what is a DSCR loan, why it’s great, and where you should never use it.

What Is a DSCR Loan?

A DSCR loan replaces a conventional loan for investors. It’s never used for owner-occupied properties.

These loans are relatively simple:

  • There are no personal income requirements (no W-2s, tax returns, etc). Instead, it’s all based on the income and expenses of the property.
  • There are no business or experience requirements. Bank or conventional loans require a business to exist for 2 years or more before they’ll lend to you.
  • They don’t need to see your portfolio. For other loans, lenders may ask to see what other properties you’ve flipped or rented. DSCR loans only care about the rental property at hand.

DSCR loans come in all shapes and sizes (3-year, 5-year, 30-year, 40-year), with a broad variety of details depending on lenders.

What Is the “DSCR” Part?

A debt service coverage ratio loan focuses on the debt ratio of the property. Does the rent pay for the expenses?

  • Rent – The monthly income a property receives from tenants, based on comps.
  • Expenses – Only mortgage payment, interest, taxes, insurance, and HOA fees. DSCR loans do not consider utilities, property management, or other expenses in this calculation.

One way to think of this ratio is: do you at least break even on this property?

To calculate a DSCR loan: Does Rent ÷ Income equal 1? If yes, you exactly break even. If it’s more than 1, then you have cash flow (and getting a DSCR loan will be even easier). But if this number is less than 1, the property costs more than it makes, and you’ll need a special kind of DSCR loan, likely with worse terms.

What Are DSCR Loans Based On?

Aside from a rental with a ratio of 1 or more, there are four main considerations in a DSCR loan:

  1. Credit Requirements – Most DSCR loans look for borrowers with a 660 credit score or above. The better your credit, the better the LTV and interest rates you’ll get. With current high interest rates, you’ll want to have a score of 700 or more to get something affordable.
  2. LTVs – The loan-to-values DSCR lenders will give vary between 75 and 85 percent. For 80-85%, you can expect higher rates or higher fees.
  3. Type of Property – DSCR loans are good for up to 8-unit properties or mixed-use. Conventional loans only go up to 4 units and are much less flexible.
  4. Location – DSCR lenders are centralized in major metropolitan areas. If you’re investing in a smaller community (population of 25,000 or less), you’ll have a tougher time getting a DSCR loan.

Benefits of a DSCR Loan

Let’s go over all the positives of a DSCR loan:

  • No income requirements for you – just the property.
  • It doesn’t matter how old your business is.
  • You can write everything off on your tax returns.
  • Lenders don’t consider your other properties in the underwriting.
  • You can buy in an LLC or company name.
  • They have interest-only DSCR options.
  • There is a variety of term lengths – from 3-year adjustable to 40-year fixed.
  • They can be used for short-term rentals, like Airbnb or VRBO.
  • A DSCR loan is a perfect long-term refinance loan for a flip project. It works great with BRRRR.

Downsides of a DSCR Loan

As a disclaimer to start: you should always shop around for DSCR loans.

There is no universal underwriting for DSCR, so every lender will be a little bit different. This product is extremely segmented. So while one lender might have a deal-breaking con, another one will have all the pros you’re looking for.

That being said, let’s look at some of the potential pitfalls of a DSCR loan compared to a conventional loan.

Interest Rate

A DSCR loan will have an interest rate somewhere between 1-3% higher than a conventional loan. Because, unlike the conventional market which is controlled by two pseudo-government agencies (Fannie and Freddie), DSCR is made up of hundreds of different investors who design these products. One lender may offer a rate of 6%, while the same client at another lender could only get 8-9%. 

 Prepayment Penalty

There are only a few states where DSCR loans don’t have prepay penalties. With a prepay penalty, there is a period (usually 3-5 years) where you must pay a fee if you want to pay off the loan. If you think you’ll want to sell or refinance the property within that time frame, DSCR might not be a cheap option for you.

For Rentals Only

DSCR loans are designed for investors with rental properties. You cannot use a DSCR loan for an owner-occupied property (aka, your personal home). These are business-based loans, so they do not follow the same standards as personal mortgages.

Credit

Since DSCR loans don’t look at your income, they do rely heavily on your credit score. Without a good score, you’ll have a hard time getting a DSCR loan (or at least one with decent rates).

Community and Loan Size

Lastly, DSCR loans aren’t ideal for smaller communities or projects. DSCR lenders typically only lend in cities with a population greater than 25,000. The lowest loan they’ll give is generally around $75,000.

How Do You Find the Right DSCR Loan

It’s always important to shop around for the best leverage, but this is especially true for the segmented market of DSCR loans.

Not sure where to start? Reach out to us at Info@TheCashFlowCompany.com.

We work with 10-15 different DSCR wholesale companies to find the best rates, highest LTVs, and lowest credit requirements.

Want to figure out if your deal works with a DSCR loan before reaching out? Check out this free DSCR calculator.

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Quick ‘n Easy DSCR Calculation

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Your DSCR calculation made easy with our free loan calculator.

Don’t be intimidated by a DSCR loan. If the property cash flows, then you have a pretty good shot at getting approved.

And there’s a simple way to find out the cash flow of a rental property: the debt service coverage ratio.

Underwriters use this ratio to determine if a property is positively cash flowing. It’s an important metric to understand if you want to maximize your leverage and get the most out of your investments.

Now, let’s go over how to calculate DSCR quickly and understand what it means for your property.

What Is a DSCR in Real Estate?

Firstly, let’s define what DSCR is. It’s a ratio that compares a property’s income to its expenses.

You calculate DSCR by dividing the property’s income (rents) by its expenses (monthly mortgage payment, taxes, insurance, and HOA if applicable). A ratio of greater than 1 means the property is cash flowing, which is what both you and your lender want to see.

So, the higher the ratio, the better the cash flow, and the more money in your pocket.

For a DSCR loan, the higher this ratio is, the better the terms your loan will have.

Expenses & Income for DSCR Calculation

Next, to find out the expenses your DSCR loan will consider, you’ll add together four items:

  • Mortgage
  • Property Tax
  • Insurance
  • HOA Fees

Finally, to find out the income, you’ll need to check out what rents are in the area for comparable properties.

How to Calculate DSCR Quickly

To help keep all these numbers straight when you calculate DSCR, you can download our free, simple DSCR calculator at this link.

Read the full article here.

Watch the video here:

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How to Calculate DSCR on Your Rental Property

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Here’s how to calculate a property’s DSCR (and what it means for your loan).

Don’t be intimidated by a DSCR loan. If the property cash flows, then you have a pretty good shot at getting approved.

And there’s a simple way to find out the cash flow of a rental property: the debt service coverage ratio.

This ratio is used by underwriters to determine if a property is positively cash flowing. It’s an important metric to understand if you want to maximize your leverage and get the most out of your investments.

Let’s go over how to calculate DSCR quickly and understand what it means for your property.

What Is a DSCR in Real Estate?

First, let’s define what DSCR is. It’s a ratio that compares a property’s income to its expenses.

You calculate DSCR by dividing the property’s income (rents) by its expenses (monthly mortgage payment, taxes, insurance, and HOA if applicable). A ratio of greater than 1 means the property is cash flowing, which is what both you and your lender want to see.

The higher the ratio, the better the cash flow, and the more money in your pocket.

For a DSCR loan, the higher this ratio is, the better the terms your loan will have.

How to Calculate Expenses & Income for a DSCR Loan

To find out the expenses your DSCR loan will consider, you’ll add together four items:

  • Mortgage
  • Property Tax
  • Insurance
  • HOA Fees

To find out the income, you’ll need to check out what rents are in the area for comparable properties.

How to Calculate the DSCR

To give you a better understanding of how to calculate DSCR, let’s look at a quick example.

Let’s say we have a property with rents coming in at $1,700 a month. 

The monthly mortgage payment is $1,290. Taxes are $100/ month, insurance is $100/month, and HOA is $100 /month. Added together, this gives us $1,590.

Now, to calculate the DSCR ratio, we divide the income ($1,700) by the expenses ($1,590). We get a ratio of 1.07.

This is great! The break-even point for a DSCR is a ratio of 1. Underwriters and lenders like to see a ratio of at least 1 to ensure that the property can take care of itself. Now lenders know you won’t need to take money out of your pocket to cover the expenses. This is assurance for them, making them more likely to approve the loan with good terms.

A 1.07 ratio means the property is positively cash flowing, and it’s a good investment.

Example of a Low Ratio

But what if we could only charge $1,500 in rent for this same property? 

Let’s look at the impact of a decrease in rent. In this case, we’d calculate the DSCR ratio by dividing $1,500 (income) by $1,590 (expenses), which gives us 0.94. You’ll need an extra $90 out-of-pocket just to breakeven.

This is less than 1, meaning the property is negatively cash flowing.

You need to estimate the rent on a property before you think about buying it. This property at $1,500 wouldn’t be a good investment (and wouldn’t qualify for a good DSCR loan). But remember – the same property at $1,700 rent would be a good investment.

Usually, the only time DSCR loans are used on a negatively cash-flowing property is when someone gets stuck with a property they can’t sell, and a little income on the property is better than none at all. It’s not wise to purchase a rental property that you know won’t cash flow from day 1.

Negative DSCR Loans

You can still find a DSCR product for negative cash flow properties.

There are certain thresholds when you calculate DSCR loans. When you break these thresholds, you get a better rate. And better rates mean… more cash flow! Your monthly payments will lower.

Let’s go over what some of these thresholds will look like.

Loans for a 1.25 DSCR

Say we have a property with $1,590 worth of monthly expenses, which we can charge a $2,000 rent on. Divide the rent by the expenses, and we get a DSCR of about 1.26.

One way of thinking of this is that the property is profiting 25% over the expenses. That’s good for the underwriter (and it’s good for you).

1.25 is a threshold for DSCR lenders. In the current market at the beginning of 2022, the rate for a 1.25 DSCR is around 7.25%.

Rates for a Negative to 1 DSCR

If a property has negative cash flow, say 0.944, then the average interest rate would be 9+% on a DSCR loan.

For a breakeven ratio of 1, the typical interest rate right now would be more like 7.75%.

The Difference

Anytime you can lower the rate, that’s cash flow that goes into your pocket.

The difference between a negative DSCR and a 1.25 is about $220/month on your payment. Over the course of a year, that adds up to $2,600. If you have 5 rental properties, that’s $13,000/year. At 10 rental properties, it’s a $26,000 difference!

If real estate investing is going to be your career or retirement plan, buying properties that you know will cash flow is vital. A couple hundred bucks a month can snowball into hundreds of thousands over time.

This is why it’s important to know how to calculate DSCR quickly when you’re looking at buying a new property. Never put a contract on a rental property when you’re not sure if the cash flow fits your goals.

How to Calculate DSCR Quickly

To help keep the numbers straight when you calculate DSCR, you can download our free, simple DSCR calculator at this link.

If you have any other questions about how to calculate DSCR (or how to get a DSCR loan!), send us an email at Info@TheCashFlowCompany.com.

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Is DSCR One of the Best Loans for Real Estate Investors?

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A few reasons why DSCR loans are some of the best loans for real estate investors.

Not all loans are created equal when it comes to real estate investing.

A traditional loan doesn’t always cut it for a value-add property. But there’s no possible way hard money can work for a rental property for more than a few months.

So what are your long-term investor loan options?

This is where the DSCR loan comes in. Here are 3 quick reasons why DSCR loans work well for investors.

Less Paperwork

The investor’s dream: less paperwork. Applications and approvals are simple with DSCR loans. There are no income requirements, employment verification, or any other intensive qualifications.

Not only is it less hassle to skip some paperwork – it also means the entire loan process is much faster.

Short-Term Rentals

DSCR loans don’t just work for traditional rentals, but they work for all real estate investment properties. DSCR loans are flexible and work with a variety of rental options. This includes VRBO, Airbnb, or a traditional long-term property.

There are a few things to take into consideration with short-term rentals and DSCR. But it’s still a simple and often profitable loan for these types of properties.

Best Loans for Real Estate Investors Doing BRRRR

Many investors wonder – are DSCR loans good for BRRRR-style properties? The answer is yes.

DSCR loans are great for the long-term, refinance loan at the end of your BRRRR project. The combination of a quick and easy loan and a structure designed for rental properties makes DSCR and BRRRR the perfect pair.

DSCR – The Best Loans for Real Estate Investors

If you’re in the market for a long-term loan on a rental property, reach out to us for help with the numbers. Send us a deal or ask us a question at Info@TheCashFlowCompany.com.

Read the full article here.

Watch the video here:

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