Tag Archive for: DSCR

DCSR Rates: What Investors Can Expect to See

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DCSR Rates: What Investors Can Expect to See

Welcome to Your September 2024 Market Update

Today we are focusing on DSCR rates and what investors can expect to see! Here at The Cash Flow Company we want to keep you up to date on where the real estate market is heading and what it means for you as an investor. Let’s take a closer look!

Great News for DSCR Loans: Rates are Dropping

If you’ve been eyeing DSCR loans, there’s some good news. We’ve seen rates drop by about 30 basis points this month alone. For well-qualified clients with strong properties, rates are now in the high sixes for 75% to 80% loan-to-value (LTV) ratios. That’s a significant decrease and nearly half a point lower than just a few months ago.

What’s Next?

Looking ahead, it’s a bit uncertain. The Federal Reserve is likely to increase rates by a quarter-point in September, and they’re talking about a few more hikes before the year ends. However, DSCR rates are based on a 5-year term rather than a 10-year, so they may fluctuate differently. However, by the end of the year, we could see these rates dip into the low sixes and possibly even the high fives early next year.

The Bottom Line

Thankfully we are seeing rates trending down across the board. That’s great news not only for cash flow and affordability, but also for getting your properties sold. The past year has been tough with high rates, but the tide is turning. More buyers are entering the market, properties are starting to cash flow again, and there’s a lot more activity overall.

Stay Updated with Our Mortgage Report

Want to keep up with where rates are headed? We’ve got a mortgage report that tracks the trends and tells you who’s offering the best rates for fix-and-flip, DSCR, and other loan products. Watch our most recent video to find out more about DCSR Rates: What Investors Can Expect to See.

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Real Estate Market Update for Investors – September 2024

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Real Estate Market Update for Investors – September 2024

Welcome to Your September 2024 Market Update

Hey there, it’s Mike with The Cash Flow Company! I’m here to give you a quick rundown of where the real estate market is headed and what it means for you as an investor. Whether you’re looking at DSCR loans, fix-and-flip projects, or even conventional rates, I’ve got you covered. Let’s take a closer look at the real estate market update for investors.

DSCR Loans: Rates are Dropping

If you’ve been eyeing DSCR loans, there’s some good news. We’ve seen rates drop by about 30 basis points this month alone. For well-qualified clients with strong properties, rates are now in the high sixes for 75% to 80% loan-to-value (LTV) ratios. That’s a significant decrease and nearly half a point lower than just a few months ago.

What’s Next?

Looking ahead, it’s a bit uncertain. The Federal Reserve is likely to increase rates by a quarter-point in September, and they’re talking about a few more hikes before the year ends. However, DSCR rates are based on a 5-year term rather than a 10-year, so they may fluctuate differently. However, by the end of the year, we could see these rates dip into the low sixes and possibly even the high fives early next year.

Conventional Rates: A Better Time for Buyers

Why should you care about conventional rates? Well, they’re crucial because they determine what your end buyers can afford. Right now, we’re seeing rates in the high fives and are around 5.625% to 5.75% for those with excellent credit and strong LTVs on owner-occupied properties.

Looking Forward

If the Fed continues to drop rates, we could see conventional rates fall into the low fives by the end of the year or early next year. While I don’t expect rates to drop more than a point or point and a half in the next 12 months, even these modest decreases will make a big difference. More buyers in the market mean more opportunities to sell your properties and move on to the next deal.

Fix-and-Flip Loans: Trending Downward

Now, let’s talk fix-and-flip loans. If you’ve got experience, which is 10 or more projects under your belt in the last two to three years, then you’re in luck. Rates for seasoned investors are now dipping back into the 8% range. Even better, we’re seeing lenders offer 10% down and 100% financing options, depending on your credit score.

What to Expect

This trend of decreasing rates is likely to continue, with some lenders already offering rates below 10% and even into the 8% range for well-qualified investors. Don’t expect huge changes by the end of the year, though. We might see another quarter or half-point drop, but this new reality of lower rates is here to stay, at least for the next 6 to 9 months.

The Bottom Line

So, what’s the takeaway? Rates are trending down across the board. That’s great news for cash flow, affordability, and getting your properties sold. The past year has been tough with high rates, but the tide is turning. More buyers are entering the market, properties are starting to cash flow again, and there’s a lot more activity overall.

Stay Updated with Our Mortgage Report

Want to keep up with where rates are headed? We’ve got a mortgage report that tracks the trends and tells you who’s offering the best rates for fix-and-flip, DSCR, and other loan products. Watch our most recent video to find out more about Real Estate Market Update for Investors – September 2024

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Why 2024 Is a Great Time to Get a DSCR Loan

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Why 2024 Is a Great Time to Get a DSCR Loan

Are you a real estate investor looking for a smart loan option in 2024? Look no further! The DSCR loans, or Debt Service Coverage Ratio loan, might be the perfect fit for you. But why is this year a great time to get one? Well, it’s simple. DSCR loans focus on the property’s income as opposed to your personal finances. Consequently, they offer fast approvals and excellent rates. Today we will explore all the reasons why 2024 is a great time to take advantage of a DSCR loan. Let’s dive in!

What is a DSCR Loan?

A DSCR loan, or Debt Service Coverage Ratio loan, is a fantastic tool for real estate investors. It’s often called a “no personal income loan.” Why? Because it doesn’t look at your personal income or tax returns. Instead, it focuses on the income from the property itself.

Why Choose a DSCR Loan?

1. No Personal Income Needed

First, the best part about DSCR loans is that you don’t need to prove your personal income. Whether you just started your business or have no job, it doesn’t matter. Therefore, as long as the property’s cash flow, you’re good to go. For example, if you have a rental property that makes enough money to cover its expenses, you can qualify for a DSCR loan.

2. Quick Approval Process

Next, because there’s no need for personal income verification, the approval process is fast. More importantly, you don’t need to wait for tax returns or employment verifications. This means you can get your loan quickly and start investing sooner.

3. Perfect for Rental Properties

Moreover, DSCR loans are ideal for rental-ready properties. This means that the property is ready to rent out without needing major repairs. For instance, if you have a duplex that’s ready to rent, a DSCR loan is a great choice.

How to Qualify for a DSCR Loan

Step 1: Property Income

Firstly, the key factor is the income from the property. Again the property must make enough money to cover its bills. These expenses include the mortgage, taxes, insurance, HOA fees, and flood insurance. If the property can cover these expenses, you’re on the right track.

Step 2: Rental Ready

Secondly, the property needs to be rental ready. This means it should be in a condition where tenants can move in right away. If it needs major repairs, it won’t qualify for a DSCR loan.

Step 3: Good Credit Score

Additionally, while your personal income doesn’t matter, your credit score. A good credit score can help you get better rates. However, the loan itself won’t show up on your personal credit report since it’s made to your business.

Why 2024 Is a Great Time for a DSCR Loan

Better Rates Than Conventional Loans

Surprisingly, in 2024, DSCR loans have better rates than conventional loans. Usually, conventional loans are cheaper, but this year, it’s different. Many DSCR loans offer lower rates, making them a more attractive option.

Tools and Resources

Don’t forget to use tools like the DSCR calculator available on The Cash Flow Company’s website. This tool helps you check if your property will cash flow, which is crucial for qualifying for a DSCR loan.

Conclusion

In conclusion, 2024 is an excellent year to consider a DSCR loan. With no need for personal income verification, there are fast approvals, and better rates than conventional loans, DSCR loans are a perfect choice for real estate investors. If you have rental-ready properties and a good credit score, now is the time to take advantage of this opportunity.

If you’re interested in learning more, visit The Cash Flow Company’s website! Start taking advantage of DSCR loans today!

Watch our most recent video to find out more about: Why You Need DSCR Loans In Today’s Real Estate Market

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DSCR Loans: Why You Need a Good Credit Score

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DSCR Loans: Why You Need a Good Credit Score

Welcome to The Cash Flow Company! Today, we’re diving into why you need a good credit score for a DSCR loan. We’ve touched on DSCR loans before, however it’s essential to understand how your credit score fits into the picture. When you’re investing in real estate, having access to the right type of loan is crucial. Therefore, DSCR loans are a fantastic option for many investors because they focus on the income generated by the property rather than your personal income. However, in order to get the most out of a DSCR loan, you need a good credit score. This score impacts several aspects of your loan, from approval to interest rates and loan terms. Let’s break it down.

First, Why Credit Scores Matter

Your credit score is a significant factor in DSCR loans because underwriting is now mostly electronic. A computer evaluates your application, therefore your credit score heavily influences the outcome. Here’s how:

  1. Approval Rates: A better credit score means you are more likely to get approved.
  2. Interest Rates: Good credit scores often secure lower interest rates.
  3. Loan Terms: Higher credit scores can lead to better loan terms.

Second, Impact on Cash Flow

Example

Let’s look at a simple example. Suppose you are looking at a property with a loan amount of $250,000. Taxes are $150 a month, and insurance is another $150 a month.

  • Good Credit (Mid to High 700s): You might get an interest rate of 7.375%, making your monthly payments about $1,727. Including taxes and insurance, your total payment is $2,027. If your rent is $2,100, your property cash flows positively.
  • Not-So-Good Credit (Below 680): You might get a higher rate, say 8.75%. This increases your monthly payment to $1,967. Adding taxes and insurance, your total payment is $2,267. With the same rent of $2,100, your property now has negative cash flow.

Third, Easier Loan Approval

A higher credit score makes it easier to qualify for a DSCR loan. Lenders prefer borrowers with good credit because it suggests reliability and lower risk.

Example

Imagine two investors:

  • Investor A: Good credit score (750). They get approved easily and enjoy better terms.
  • Investor B: Lower credit score (650). They struggle to get approval and face higher rates and less favorable terms.

Fourth, Better Loan-to-Value (LTV)

LTV is the ratio of your loan amount to the value of the property. Your credit score affects this too.

How It Works

  • Good Credit: You might only need to put down 15-20%.
  • Poor Credit: You might have to put down 25-30%.

For a $300,000 property, this difference could mean needing an extra $30,000 upfront.

Finally, More Options and Lower Costs

When you have a good credit score, more lenders want to work with you. This competition can lead to lower costs, like reduced origination fees or better interest rates.

Example

With a high credit score, you might have multiple lenders vying for your business, which often results in better deals. Lower credit scores limit your options and can lead to higher costs.

Conclusion

In conclusion, having a good credit score is vital for securing a DSCR loan and maximizing your real estate investment potential. Not only does a high credit score make it easier to get approved for loans, but it also helps you secure better interest rates and more favorable loan terms. Consequently, this leads to improved cash flow and the ability to invest in more properties with less money down.

Watch our most recent video: DSCR Loans: Why You Need a Good Credit Score

Tools and Resources

At The Cash Flow Company, we have tools to help you. Check out our Credit Score Checklist on our website for easy tips on improving your score.

Visit The Cash Flow Company and click on “Tools” to download our Credit Score Checklist.

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Three Key Factors That Impact Your DSCR Loan

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Three Key Factors That Impact Your DSCR Loan

When you’re investing in real estate, understanding your DSCR (Debt Service Coverage Ratio) loan is crucial. These loans focus on the property’s income as opposed to your personal income, making them a unique option for many investors. However, in order to get the most out of a DSCR loan, you need to know what factors play a key role. Today we’ll break down the three main factors that impact your DSCR loan. By further understanding these factors, you can not only make smarter decisions but you can also improve your chances of success in real estate investing. So, let’s dive in and explore how your credit score, loan-to-value ratio, and property income affect your DSCR loan.

1. Credit Score

Your credit score is like your financial report card. It shows lenders how reliable you are with borrowed money. Here’s why it matters:

  • Approval Chances: A high credit score makes it easier to get your loan approved. For example, if you have a score of 750, lenders see you as low risk.
  • Interest Rates: Better scores mean lower interest rates. Consequently, lower rates reduce your monthly payments, leaving you with more cash flow.
  • Down Payments: With a high credit score, you might need to put down less money upfront. This means you can invest in more properties.

Imagine two investors. One has a credit score of 750, and the other has 650. The first investor gets a lower interest rate, pays less each month, and keeps more profit. The second investor however struggles with higher rates and lower cash flow.

2. Property Income

The income from the property is the star of the show for DSCR loans. Unlike other loans, DSCR loans focus on the property’s ability to generate income, not your personal income. Here’s why it matters:

  • Income Generation: The property must generate enough income to cover the loan payments. If it does, you’re more likely to get the loan.
  • Cash Flow: A property with strong rental income means better cash flow for you. Therefore, this ensures you can cover expenses and make a profit.
  • Investment Strategy: Properties with higher income potential are more attractive. They provide better returns and make it easier to get loans.

Consider a property that rents for $2,100 per month. If your monthly expenses are $2,027, you’re in good shape. However, if your payment is $2,267 due to a higher interest rate, the property doesn’t cover the loan, making it harder to get approved.

3. Loan-to-Value Ratio (LTV)

The Loan-to-Value ratio compares the loan amount to the property’s value. It shows how much equity you have in the property. Here’s how it works:

  • Investment Size: Lower LTV means you need to invest more money upfront. Higher LTV means you borrow more and invest less.
  • Refinancing: With a good LTV, you can refinance and pull out cash from your property. This helps you fund more deals or pay off other debts.
  • Risk Assessment: Lenders use LTV to assess risk. A lower LTV is safer for lenders, which might get you better loan terms.

For example, if you buy a $300,000 property with an 80% LTV, you borrow $240,000 and put down $60,000. But if your LTV is 70% due to a lower credit score, you borrow only $210,000 and need to put down $90,000. That extra $30,000 could have been used for other investments.

Conclusion

In summary, your credit score, property income, and LTV ratio are the three main factors that impact your DSCR loan. By focusing on these areas, you can improve your chances of loan approval, get better terms, and maximize your investments.

Ready to boost your credit score? Check out our Credit Score Checklist at The Cash Flow Company. It’s packed with tips to help you improve your score and make the most of your real estate investments. We are here to help! Contact us today to find out more about DSCR loans!

Watch our most recent video:Three Key Factors That Impact Your DSCR Loan

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Avoid These 4 Credit Score Mistakes for Your DSCR Loan

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Avoid These 4 Credit Score Mistakes for Your DSCR Loan

DSCR (Debt Service Coverage Ratio) loans are a game-changer for real estate investors. However, credit score does play a crucial role in the process. By avoiding some common credit score mistakes it can make all the difference. Let’s dive into four key credit score mistakes that you need to avoid and see how they impact your DSCR loan.

1. Cash Flow

Your credit score directly affects your loan interest rate, which in turn impacts your cash flow.

Example:

For this example we will use a loan amount of $250,000. If you have a good credit score (mid to high 700s), you might get a 30-year fixed rate at 7.375%. The monthly payment would be around $1,727. With taxes and insurance, your total payment would be $2,027. If the rent is $2,100, you have a positive cash flow.

However, if your credit score is lower (around 660), the interest rate might rise to 8.375%. This increases the monthly payment to $1,967, making your total payment $2,267. Now, your expenses exceed your rent, leading to negative cash flow. Therefore, keeping a good credit score is essential for maintaining a healthy cash flow.

2. Loan to Value (LTV)

Your credit score also affects how much you need to put down on a property, which is known as the loan to value ratio (LTV).

Example:

If you have a strong credit score, you might only need to put down 15-20% of the property’s value. For a $300,000 property, this means a down payment of $45,000 to $60,000. But with a lower credit score, your down payment requirement might increase to 25-30%, or $75,000 to $90,000. This higher down payment can limit the number of properties you can purchase and tie up more of your capital.

3. Approval

A higher credit score makes it easier to get your DSCR loan approved. Lenders view you as less risky, increasing your chances of approval.

Example:

Consider a scenario where your DSCR loan application is on the edge of approval. With a good credit score, your lower interest rate ensures your property has a positive cash flow, making it more likely for the loan to get approved. On the other hand, a lower credit score increases your interest rate, potentially leading to negative cash flow, and thus, your loan application might be rejected.

4. Options

A good credit score gives you more options. As a result, more lenders will compete for your business, which results in better loan terms.

Example:

With a high credit score, you will find multiple lenders who are eager to offer you a DSCR loan. This competition can lead to lower origination fees and better interest rates. Conversely, a lower credit score means fewer lenders will be willing to work with you, and those who do may charge higher fees and interest rates, reducing your overall profitability.

Conclusion

In conclusion, your credit score is a vital tool in real estate investing. It affects your cash flow, LTV, loan approval, and the options available to you. By avoiding these common credit score mistakes, you can make your investment journey smoother and more profitable. Always remember, maintaining a good credit score is within your control and can significantly impact your success as a real estate investor.

For additional tips and tools that will improve your credit score, visit our website at The Cash Flow Company and check out our Credit Score Checklist.

Finally, watch our most recent video to find out more about how you can:Avoid These 4 Credit Score Mistakes for Your DSCR Loan

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Maximizing Rental Profits: Ensuring Your Property Makes Money

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Maximizing Rental Profits: Ensuring Your Property Makes Money

In order to be successful in real estate investing it is crucial that you maximize your profits on rental properties. Previously we discussed the roadblocks in real estate investing and what needed to be done in order to avoid them. Today we are going to focus on the 4th roadblock, which is rentals. How can you ensure your property makes money? Let’s dive in and find out more.

What makes up monthly costs?

In real estate investing it is important to know your numbers. What exactly does that mean? It all begins by calculating the monthly costs and subtracting them from the rental income. The monthly costs include interest, taxes, insurance, HOA, and flood. Another thing to keep in mind if you plan on using a DSCR loan is the DSCR ratio. This value would be added into the monthly costs as well. Here at The Cash Flow Company we know that numbers are not for everyone! We are happy to help walk you through things to ensure that the property will make money before you dive in! 

Does the property cash flow?

Real estate investors need to make sure that the property will make money before diving into the deal. By taking the time to do the calculations, you can quickly determine if the property will have a positive cash flow. Just to clarify, a positive cash flow is created when the rental income is greater than the monthly costs. It is imperative to determine this before purchasing a property, closing on a loan, or beginning a BRRRR. Don’t get into properties if you can’t afford to take losses. You never know what expenses may come up in the future.

The impacts of today’s market.

In today’s market, you need to break even if not make a little money monthly on the rental property. Predictions indicate that rates will be going back down this year to 5.5%. When rates decrease, it allows you to make even more on your investment property by refinancing. This is the ideal situation for a BRRRR, because you will have the opportunity to refinance. It creates the opportunity to take advantage of a lower rate, while capturing the equity. A DSCR on the other hand has prepayment penalties that could affect your ability to refinance. What do we mean by prepayment penalties? A prepayment penalty is a percentage of the remaining balance that will be charged if you pay off the loan early, refinance, or sell the property. While no one has a crystal ball predicting the future, it is important that you take everything into consideration beforehand.

The fine line between being approved or denied for a loan.

For a DSCR loan as well as many others, loan approvals are becoming more challenging. Whether it’s changes in your credit score or the DTI, investors walk a fine line. Being denied could cost $5K to $10K in earnest money. In looking at a BRRRR, if you have a fix and flip loan, bridge loan, or even a hard money loan, you may not be able to refinance it due to the bank’s requirement changes. The increased interest rates that are associated with the requirement changes could cause your property to have a negative cash flow as opposed to a positive one. When you are looking at investing in rental properties it is imperative that you are approved for financing prior to going shopping.

In conclusion.

Real estate investing is heavily reliant on funding and leverage. It is a high intensity business that is reliant on someone else giving them money at a rate that makes sense. Whether you are just starting out or you are a  seasoned investor, it is important that you understand numbers. In doing so, you will create the wealth you need to  succeed in this business. 

How can you start Maximizing Rental Profits and  Ensuring that Your Property Makes Money? Watch our most recent video to find out more!

Not sure where to begin or how to do the calculations to ensure cash flow? Contact us today! We are happy to walk you through the numbers.

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What is an Interest-Only Loan?

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What is an Interest-Only Loan?

Are you a real estate investor looking for ways to boost your cash flow and make your investments more manageable? If so, you might want to consider an interest-only loan. These loans are becoming more popular among investors who want lower monthly payments and more flexibility with their finances.

How Does an Interest-Only Loan Work?

For the first few years (usually 5, 7, or 10 years), you only pay interest. After this period, you start paying both interest and principal. This means your payments will go up, but by then, you might be earning more rent or have other ways to cover the higher payments. Consequently, you can plan your finances better knowing when the higher payments will begin.

When is an Interest-Only Loan a Good Idea?

Interest-only loans can be great for:

  • Investors wanting to improve cash flow: Lower payments mean more money in your pocket each month. Therefore, you can handle your financial obligations more easily.
  • People planning to sell or refinance soon: If you plan to sell or refinance before the interest-only period ends, you can benefit from lower payments without worrying about the higher payments later. Thus, this can be a strategic move to maximize your investment.
  • Short-term projects: If you’re working on a project that will increase your income soon, like renovating a property to increase rent, this can help bridge the gap. As a result, you can complete your projects without financial strain.

Example:

Let’s say you own a rental property, but your current loan payments are too high compared to your rental income. By switching to an interest-only loan, your monthly payments go down. This helps you qualify for more loans, improve cash flow, and even take out more money to invest in another property. Consequently, you can grow your investment portfolio more effectively.

Conclusion

In conclusion, interest-only loans can be a powerful tool for real estate investors. They offer better cash flow, easier loan qualification, and more flexibility with your money. If you think an interest-only loan might be right for you, talk to a lender or financial advisor to explore your options. Therefore, taking advantage of interest-only loans can help you achieve your real estate investment goals more efficiently.

Ready to explore interest-only loans further? Visit our website, TheCashFlowCompany.com, to learn more. We offer a simple inquiry form where you can share your details. Don’t worry, we don’t do hard credit pulls or make frequent calls. We’re here to provide helpful advice and see if an interest-only loan is right for you. If it works, great! If not, no pressure.

Watch our most recent video to find out more about: What is an Interest-Only Loan?

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Top 3 Benefits for Real Estate Investors

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Intro to Interest Only Loans: Top 3 Benefits for Real Estate Investors

Interest-only loans are becoming a popular choice for real estate investors. Why? Because they offer unique advantages that can make a big difference in your investment strategy. Today we will explore the top three benefits of interest-only loans and how they can help you qualify more easily, improve your cash flow, and access larger loan amounts. Let’s dive in and see why an interest-only loan might be the right move for your next investment.

What is an Interest Only Loan?

An interest-only loan is exactly what it sounds like. You only pay the interest on the loan for a set period of time. Unlike typical mortgages where you pay both interest and a bit of the principal, an interest-only loan keeps your payments low by only covering the interest.

Benefits of Interest Only Loans

Interest-only loans offer several advantages, especially in today’s market. Here are the top three benefits for real estate investors:

1. Easier Qualification

One of the biggest benefits of an interest-only loan is that it can make it easier to qualify for financing.

Example: Let’s say you want to buy a rental property, but the current rent isn’t high enough to qualify for a regular loan. By switching to an interest-only loan, your monthly payments are lower. As a result, this reduces your expenses and improves your chances of meeting the lender’s requirements.

2. Improved Cash Flow

Next, interest-only loans can significantly boost your cash flow. With lower monthly payments, you have more money available each month.

Example: Imagine you own several rental properties. With an interest-only loan, your payments are smaller, giving you more cash each month. Consequently, this extra money can be used for renovations, paying off other debts, or simply enjoying a higher income.

3. Greater Loan Amounts

Finally, interest-only loans can help you access larger loan amounts. Since your payments are lower, you might qualify for more money.

Example: Suppose you’re an investor looking to cash out on a property to fund another project. By opting for an interest-only loan, you reduce your payments and can pull out more cash. This gives you the capital needed to start your next investment sooner.

How to Get Started with an Interest Only Loan

Ready to explore interest-only loans further? Visit our website, TheCashFlowCompany.com, to learn more. We offer a simple inquiry form where you can share your details. Don’t worry, we don’t do hard credit pulls or make frequent calls. We’re here to provide helpful advice and see if an interest-only loan is right for you. If it works, great! If not, no pressure.

In conclusion, interest-only loans are a fantastic tool in the right market and for the right investor. They help you qualify easier, improve your cash flow, and access more funds. Whether you’re building, renovating, or just want better cash flow, consider if an interest-only loan fits your strategy.

Watch our most recent video to find out more about: Intro to Interest Only Loans: Top 3 Benefits for Real Estate Investors

 

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What Does Debt Service Coverage Ratio Mean?

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What Does Debt Service Coverage Ratio Mean?

Today we are going to discuss what debt service coverage ratio means and how a DSCR loan can help you achieve your investment goals. Thankfully there are a multitude of products that are available for investors to not only purchase new properties, but to refinance as well. Whether or not you have a job, just changed jobs, or write everything off on your taxes, there are products out there for you. How can a DSCR loan help you? Let’s take a closer look!

What does debt service coverage ratio mean?

The debt service coverage ratio is where your property breaks even. Just to clarify, that is when the income from the property and the expenses break even. While every property has a different break even point, this is the value that lenders will be looking at to determine whether or not the property qualifies for a DSCR loan. The expenses that lenders take into consideration are the mortgage payment (including interest), taxes, insurance, flood, and HOA. For example, if your rent is $1,000, then your expenses need to be $1,000 or less in order to qualify for a DSCR loan. The best scenario would be if your rents were $1,500 and the expenses were $1,000. This would create a $500 cash flow for the property.

A DSCR is the best loan option!

One of the most versatile loan options available for investors is a DSCR loan. How do you qualify? As long as your rental property will cover the debt, you will be able to qualify for a DSCR loan. Unlike traditional loans, a DSCR loan will not take into consideration when you started your job or how long you’ve been self-employed. Instead, the lender’s primary focus is whether or not the income from the property qualifies for the loan.

Contact us today!

Here at The Cash Flow Company we are happy to run through the numbers with you to see what product is best for you. Contact us today to find out more about how you can qualify!

Watch our most recent video: What Does Debt Service Coverage Ratio Mean?

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