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If you’re diving into real estate investing, you’ve probably heard of DSCR loans. One of the most common questions we get is: Can I get a DSCR loan faster than a traditional loan? The answer is usually yes! Let’s explore the three main reasons why DSCR loans often close quicker, helping you start growing your wealth sooner.

1. No Tax Returns Needed

One of the biggest hurdles with traditional loans is the paperwork. Most banks require personal and business tax returns to prove your income history. This can be a problem if you haven’t filed taxes recently or if you’re new to the business.

With a DSCR loan, there’s no need to provide tax returns! That means you can qualify even if you’ve just started your business or recently moved to a new city.

Example:

Imagine you just launched your real estate investing business. You haven’t filed taxes yet or moved from another city. With a traditional loan, you’d need to wait two years to prove your income. But with a DSCR loan, none of that matters—they only look at your property’s potential to make money.

This quick qualification makes a DSCR loan much faster than a traditional loan, allowing you to get started right away.

2. No Business History Required

Traditional lenders usually want to see a solid business history. If you recently switched from a W-2 job to being self-employed or changed your field of work, they might not approve your loan.

DSCR loans don’t have these strict rules. They focus on the income from the property, not your past job or business experience.

Example:

Let’s say you used to work a 9-to-5 job but decided to switch to a freelance role. Traditional lenders might say no because you don’t have a long history in your new career. But with a DSCR loan, all that matters is that your rental property can cover its costs or even generate cash flow.

This flexibility speeds up the process, making DSCR loans a smart choice when you’re eager to invest.

3. Start Building Wealth Faster

The biggest advantage of DSCR loans is how fast you can start building wealth. Traditional loans often force you to wait two years or more to prove your income on paper. In contrast, DSCR loans allow you to begin investing right away.

With a DSCR loan, you can start now and use your rental income to qualify. This means you don’t have to wait to grow your portfolio and start earning passive income.

Example:

Suppose you found the perfect rental property that’s ready to go. Instead of waiting years to build up your tax returns, you can use the property’s rental income to qualify for a DSCR loan today. This way, your journey to financial freedom starts now, not later.

Use Our DSCR Calculator to Plan Your Investment

At The Cash Flow Company, we offer a DSCR calculator to help you see if your rental property will cash flow. This tool lets you run the numbers on your potential investment, so you know if it’s a good fit for a DSCR loan. Visit our website to give it a try!

Conclusion

If you want to grow your wealth faster and start investing without the long wait, DSCR loans are a great choice. They’re perfect for new investors or anyone looking to build a rental portfolio quickly. While traditional loans might hold you back with their strict rules, DSCR loans let you focus on what matters most—the property itself.

So, why wait years when you can start now? Explore DSCR loans and see how they can help you achieve your real estate goals! Contact us today to find out more!

Watch our most recent video to learn more about: “Can I Get a DSCR Loan Faster Than a Traditional Loan?”

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If you’re considering a DSCR loan (Debt Service Coverage Ratio loan), you might wonder, “do lenders care more about you or your property?” It’s a common question, and understanding the process can help you get approved smoothly. Let’s walk through the exact steps.

What YOU Need to Get Approved for a DSCR Loan

Before you even think about a property, start with you. You’ll want to get pre-approved to ensure you’re ready when the perfect deal comes along. Here’s what lenders look at when they evaluate you:

  1. Credit Score
    Your credit score is one of the most important factors for getting the best DSCR loan rates. The higher your score, the better your rate. It’s smart to check where your credit stands now and see if there are ways to improve it before applying. For example, if your score is on the lower end, you might work on improving it before buying.
  2. Cash to Close
    Do you have enough money for the down payment, closing costs, and reserves? With DSCR loans, you typically need around 20–25% down. For instance, if you’re looking at a $250,000 property, you’ll need at least $50,000 plus closing costs. Make sure the cash is ready in your account, as lenders will check to see if it’s accessible.
  3. LLC Setup
    Most investors buy properties under an LLC. So, it’s important to make sure your LLC is set up correctly. Have your EIN, operating agreement, and other paperwork ready. This step will help speed things up when you put a property under contract.

What Your PROPERTY Needs to Get Approved

Now that you’ve got yourself ready, it’s time to think about the property. Lenders also care a lot about the property you’re buying, especially with DSCR loans. Here are the main things they’ll look at:

  1. DSCR Ratio
    The DSCR ratio is the most critical factor for your property. This ratio compares the property’s income to its expenses. A ratio of 1:1 means the property earns enough rent to cover its mortgage, taxes, insurance, and other costs. You can calculate this easily using a tool like the one available on the Cash Flow Company website. Make sure the property hits at least 1:1, or you might have to bring more money to the table.
  2. Location
    Where is the property located? Properties in rural areas can be tough to finance because lenders struggle to find comps (comparable sales) for the appraisal. If your property is too remote, it may be excluded by some lenders, which could limit your options.
  3. Size (Loan Amount)
    Lenders also consider the property’s value and loan amount. For example, if you’re buying an $80,000 property, it might be hard to find a lender because some have minimum loan amounts. Even though smaller properties can cash flow well, make sure the loan amount is big enough for the lender to approve.

Are You Ready to Apply for a DSCR Loan?

Before you start shopping for properties, it’s best to get pre-approved. This way, you’ll know your credit score is in order, you have the right amount of cash, and your LLC is ready to go. After pre-approved, you can focus on finding a property that qualifies based on its DSCR ratio, location, and size.

If the property you want doesn’t quite meet the ratio, don’t worry. There are options — but be aware the rates might be higher, and it could be trickier to get the property cash flowing.

Need Help with Your DSCR Loan?
If you’re unsure about your approval status or need help calculating your DSCR ratio, feel free to reach out to us at The Cash Flow Company. We’re here to help you get the best loan possible so you can build wealth and create the financial freedom you’re after!

Watch our most recent video to find out more about “Do lenders care more about you or your property?”

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