Tag Archive for: rental properties

DSCR Loans and BRRRR Properties – Fundamentals Explained

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DSCR Loans and BRRRR Properties – Fundamentals Explained

Today we are going to talk about DSCR loans and explain the fundamentals that you need to keep in mind when working with BRRRR properties. Here at The Cash Flow Company we are averaging 10 to 15 calls a day regarding the fundamentals. What are the fundamentals? They include knowing where to start, what you need to do, and how to be successful. In order to be successful, it is imperative that you go over the numbers first to make sure that you are getting into a good property. Investors need to determine whether or not the property is cash flowing before diving in. How can you be successful and create a profitable investment? Let’s take a closer look.

What is the BRRRR strategy?

What exactly is BRRRR? BRRRR stands for buy, repair, rent, refinance, and repeat. The main purpose of BRRRR is to get into properties using little to no money out of your pocket. Those who use this strategy correctly will be able to accumulate “value at” properties quickly and create a portfolio. Just to clarify, “value at” properties are those that are under market value and need work done. These are often hoarder houses, in need of yard cleanup, and ones that need maintenance or repairs. Whether the current owners were unable or unwilling to fix up the property, it creates the perfect opportunity for investors. By taking the time to fix up the properties, you will in turn create net worth for the property.

Two loans, one goal!

With BRRRR you need one loan for the purchase and repair, plus a long term loan for the refinance. The short term loans are often a hard money loan or a private loan ranging from 10% to 12% interest rates. It is important to keep in mind that these loans are only temporary, lasting 6 to 12 months. After that time, the loan balloons. That is why it is so important to have a long term loan option available when using the BRRRR strategy. Unfortunately,  many people do not do the research up front or run through the numbers before making the purchase. Don’t wait until the refinance! Take a look ahead to make sure that the property you want to buy will be able to cash flow later on. 

Look ahead to ensure success.

One of the most important pieces of the BRRRR strategy is refinance. A refinance is needed so that you can carry the loan long term. While buying the right property is important, it is crucial that you look ahead in preparation for the refinance. Oftentimes investors get to the refinance and either can’t get a loan or they can’t get enough money to cover their costs. In either case, it would defeat the purpose of using the BRRRR strategy. By doing the research up front and making sure that the whole thing works, you will actually make money. A lot of people don’t take the time to work through the numbers. Instead they discover during the refinance closing that they are going to lose money.

What is a DSCR loan and how can it work with BRRRR?

A DSCR loan is based solely on the property and your credit score. If the property’s income or rents are not very high, then you’re not going to get that big of a loan. The lenders will decrease the LTV until the break even point or sometimes higher. In the end, the lenders need the income and the expenses to be the same. This is referred to as the DSCR ratio. Just to clarify, expenses include the monthly payments, taxes, insurance, HOA, and flood insurance. One thing to keep in mind is that the LTV is different for each person and for each property. In the end you need to determine if your expenses equal your income prior to purchasing the property. 

For example:

An investor is using a DSCR and buys something where the purchase, rehab, and everything puts them at 80%. However, the property itself only qualifies for 70% because of its break even point. While many think that they are good because they bought it and are into it for 75% to 80%, this is not always true. When it comes to refinancing the property, lenders can only do 70% to 75%. It is confusing and often daunting because there are so many moving parts. However, by laying it out and making sure that the property cash flows, you will be successful.

We are here to help!

Here at The Cash Flow Company, we are happy to run through the numbers with you to make sure that you are setting yourself up for success. That would include checking your rents, taxes, insurance, and LTV to make sure that you would qualify for a long term loan when you go to refinance. Don’t chance being surprised at the refinance closing! Take the time now to run through the numbers and ensure your success for the future! 

Contact us today to see if a DSCR loan and the BRRRR strategy are right for you!

Watch our most recent video DSCR Loans and BRRRR Properties – Fundamentals Explained to learn more!

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What is House Hacking – Real Estate Investing Tips

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What is House Hacking – Real Estate Investing Tips

Here at The Cash Flow Company we want to give you as many investing tips as possible to help you win the real estate game. Today we are going to discuss house hacking by looking at the benefits and highlighting some examples. What is house hacking? It is when you buy a property and rent out a portion for additional income. These properties are multi tenant properties that often need some work. Let’s take a closer look at the benefits and a few examples of how this process works. 

Benefits of house hacking.

There are a few benefits to house hacking. Real estate investors are able to apply for an owner occupied loan for the multi tenant property. These loans not only allow them to stay in the property that they are renting, but they also tend to have better rates as well.

Example:

There is a gentleman who bought a duplex and fixed up one side to rent out. Then moved into the other side of the duplex. By using an owner occupied loan, he not only had a lower interest rate, but also got into it for 100%. This customer put little to no money into the property for the purchase, while only having to cover the fix up expenses. 

Example 2:

I also helped a doctor who bought 5 or 6 duplexes and triplexes with 100% financing. We find that banks will typically give doctors and dentists 100% financing. Every year or so this doctor buys a new duplex or triplex and continues the cycle of house hacking. She will live in one side in order to get better financing on the property, while renting out the other side to generate cash flow.

In conclusion.

While it takes more time, house hacking provides the opportunity for real estate investors to have 100% financing and better rates compared to traditional loans. In order to be successful, it is imperative that the property is cash flowing and pays for itself. This will provide the financial flexibility you need to move onto the next property. 

Do you have more questions? Here at The Cash Flow Company we are happy to share our real estate investing tips with you! Contact us today to learn more.

Watch our most recent video to find out more about What is House Hacking – Real Estate Investing Tips.

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DSCR Loan vs Traditional Loan – What’s BEST For You?

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DSCR Loan vs Traditional Loan – What’s BEST For You?

There are a variety of loans available to investors. Some of these include a traditional 30 year fixed, hybrid 40 year fixed, 5 year interest only, 10 year interest only and even adjustable. Depending on your cash flow and what you are needing, you can create the flexibility you need to succeed. Today we are going to discuss DSCR vs traditional loan. What’s best for you? Let’s take a look!

What is a prepay penalty?

When applying for a DSCR loan vs a traditional loan you need to take into consideration that a DSCR has prepay penalties.These are standard 3 or 5 year prepay penalty that will be charged if you refinance, sell, or pay the loan off in full before the 3 or 5 year mark. This is normally a 3, 2, 1 structure. Just to clarify, 3% would be charged if the loan is paid within the first year, 2% the second year, and 1% the third year. Traditional loans however do not have a prepay penalty. Instead investors can come and go as they please. Before considering a DSCR loan, take into consideration the duration that you will need the loan for. It could potentially cost you a significant amount to get out of the loan if you decide to pay it off early.

Understanding rates for a DSCR vs a traditional loan.

When we are looking at a traditional loan vs a DSCR loan the rates will vary. A DSCR loan could be up to a half point higher than a traditional loan. A DSCR loan typically has a higher interest rate. This is because the lender does not verify your income when you apply. Instead they calculate whether or not the property will cash flow. A traditional loan on the other hand does verify your income over a two year period. This provides them the security they need to offer a lower rate. Income verification is difficult for many real estate investors because they write as much off as possible on their taxes. A DSCR can help these investors to get a good loan as long as they have good credit.

Would you like to learn more about DSCR loans? Contact us today to see if a DSCR loan is the best for you! 

Watch our most recent video to find out more about DSCR Loan vs Traditional Loan – What’s BEST For You?

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How to Escape Financial Struggles with Peer to Peer Lending

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How to Escape Financial Struggles with Peer to Peer Lending

What is peer to peer lending? Peer to peer lending is asking anyone that you know, or even people you don’t know, for money. While family and friends can be part of this, that is not what we are talking about. Instead we are referring to people in your community or those in the real estate community. These individuals want to make money, however, they don’t want to own properties. Roughly 98% of peer to peer money comes from these groups of people, not family and friends. So how can peer to peer lending help to escape financial struggles? Let’s take a closer look.

The struggles with budgets.

There are a lot of people right now who are struggling with their budgets. This is because everything has gone up. From taxes and insurance, to the cost of gas, budgets are being stretched more and more every day. This is where peer to peer lending can help people to escape their financial struggles. Peer lenders, who have money in their IRA, are looking for better returns. At the same time real estate investors and business owners are looking for better lending options. By working with real people again, both the borrower and lender can benefit from peer to peer lending.

Peer to peer lending can replace traditional loans.

Peer to peer is centered on finding people who are willing and want to get into a win win situation. As investors, we want to replace some or all of the funding that we normally receive from traditional lenders. These traditional lenders include banks, hard money lenders, and private lenders. By replacing all of that with a peer to peer bucket of money, you can create a faster, easier, and cheaper lending option. There is no need to be fearful! Peer to peer has been around since before banks were even established.

Creating better returns.

Those who use peer to peer lending will in turn get better returns than they would in other situations. For example, banks will normally give someone 5% and then lend out 9%. This creates a 3% to 5% profit for the bank. When you borrow directly from me, you will get cheaper money, and I will also get a better return because it is secured. A secured return is one that is secured by a piece of real estate. By taking the bank out of the middle, it makes it faster, easier, and cheaper money. Thus creating a win win situation for both the borrower and the lender.

Keep it simple and be prepared.

When we are talking about peer to peer lending we are not talking about begging people for money. We are also not saying that you need to go out and convince people. While you do have to go through a process, if it’s done correctly, then you can easily get people involved in lending you money. Once you have one peer to peer lender, you can easily jump to more by showcasing how you treat your peer lender, showing that you pay on time, and paid it back. Those who treat it like a bank loan or a real business will be able to expand their peer to peer bucket of money at a much faster pace. For those who struggle with communication, you can create a quick presentation or video to explain everything with links. Don’t make things complicated! Remember to keep it simple and always be prepared.

What do you need to do to be prepared?

Peer to peer lending requires less paperwork than a traditional loan. You also don’t have to worry about being denied because of your bank statements or credit scores. With the way things have changed and shifted over the years, the lending pools are shrinking as well. By taking the time to get everything secured, you will create a win win situation. Let’s take a closer look at what you need.

  1. We are going to secure this with a piece of real estate by using a deed of trust or mortgage.
  2. It’s going to be recorded by title. 
  3. Wire money directly to title for the closing.
  4. We are going to make it so secured that it will make them feel reassured.
  5. You are going to build a nice case to show them the property.
    1. Rental – Maybe it’s already fixed up and already rented. Then you can show that money is coming in.
    2. Flip- Here’s the flip and if it’s new, here’s what I’m going to do to the property. If you are experienced, then you can show what you have done in the past.
  6. When the property is refinanced or paid off, then the title company is going to pay the peer lender back directly.

Find people who are engaged or looking 

Peer to peer lenders are everywhere! Many are in their retirement age or in a retirement zone and just need more money to live. With the rapidly increasing cost of living over the past few years, many people are looking for something that will provide a better and more secure return. 

  • Self Directed IRA

This is a group of people who have their 401K or IRA in a self directed plan. A self directed plan is one they can use to invest in anything. Those with this type of plan are used to working with private places such as a business preliminary stock or deeds. 

  • Equity Trust and Direction IRA

They have meetups and groups that you can attend so that you can get connected with others in the community. An added benefit is that they have people who can take care of the paperwork for you while you decide where to invest.

Peer to peer provides flexibility

Many investors and business owners wonder what they can use peer to peer lending for and what the dollar amounts are. The flexibility of peer to peer, unlike banks, allows you to use it for small amounts, fix up costs, monthly payments, large amounts, and so much more! The beautiful thing about peer to peer is that there is always funding available from $10K to 10 million. It all depends on what you need and who you work with.

Here is a list of common uses for peer to peer funds.

  1. Gap funding 
  2. Finishing a project 
  3. Paying off a credit card
  4. Lines of credit 
  5. Developing land 
  6. Auctions 
  7. Rentals 
  8. Flips
  9. Land
  10. Construction 
  11. Anything that looks like a good deal and has security
  12. Expansion
  13. Growth

Peer to peer helps the community.

By using peer to peer lending as opposed to traditional lending, you’re putting money back into the community. By living here, working here, and investing here, you can see the benefits of your hard work. From fixing up properties to renting properties, we are going to improve the community around us. People who are lending will feel that they are helping the community, plus they can see where their money is. 

Now is the time

Now is the time to buy! There are predictions that rates will decrease in 2024.  It is important that investors set up their peer to peer bucket of money as soon as possible. Don’t waste time waiting for loan approvals from banks. Instead, think outside the box and find your peer to peer community today. Peer to peer lending makes it easier and more profitable for both the borrower and lender.  

Here at The Cash Flow Company we can help you navigate peer to peer lending. We have created systems to help navigate the process for both the borrower, as well as the lender. Contact us today to find out more.

Watch our most recent video to discover more about How to Escape Financial Struggles with Peer to Peer Lending.

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How Rising Interest Rates Impact Cash Flow

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How Rising Interest Rates Impact Cash Flow

Today we are going to look at an example of how rising interest rates impact cash flow for real estate investors who are using a DSCR loan. To clarify, a DSCR loan is a loan that focuses on the rents from a rental property and the credit worthiness of the borrower. In today’s market, the increasing interest rates are truly affecting payments and more importantly they are negatively impacting cash flow. 

Example:

$250K Loan 
Time Frame Percentage Expected Payment Change over Time
Couple years ago 3.75% $1,158
Now 9% to 11% 

(depending on LTV)

 $2,011 $853 

Payment Increase 
In the Future 7% 

(you refinance $2,011 principle)

 $1,663 $348

Cash flow increase 
The Optimus  5%

(Looking if it dropped from 9% to 5%)

 $1,342 $669 

Cash flow increase 

This example allows us to visualize why rental properties are failing to cash flow while using a DSCR loan. As a result to higher interest rates, investors are experiencing increasing payments for their properties. This is in addition to rising taxes, and increasing insurance expenses as well. As a result, investors are struggling to break even, let alone create cash flow. In sum, all of these pressures are making it harder to be successful in real estate investing. 

What’s next?

I will be doing a follow up video that will further show you the effect that interest rates have on cash flow. This will include a look from the buyers side, and how the market is going to push up your values. While we don’t have control over the interest rates, we can instead use this time to make the most of the market. By investing in undervalued properties now, you can then refinance when rates go down. This in turn will create the cash flow you need to succeed in the years to come.

Watch our most recent video about why rental properties fail to cash flow and how you can set yourself up for success by investing now.

Do you have questions about DSCR loans or how you can create generational wealth? Contact us today!

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DSCR Loan: Why Rental Properties Fail to Cash Flow

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DSCR Loan: Why Rental Properties Fail to Cash Flow

Today we are going to dive into an example illustrating why rental properties fail to cash flow using a DSCR loan. A DSCR loan are loans focused on the rents from a rental property and the credit worthiness of the borrower. In today’s market, the increasing interest rates are truly affecting payments and more importantly they are impacting cash flow. As a result, it has become harder and harder to qualify for a DSCR loan. Likewise, DSCR ratios are changing also. What used to be a 1:1 ratio (rents compared to expenses), has now increased depending on your LTV. Therefore, many investors can no longer qualify because there is no cash flow for the property. So, what does this look like numbers wise? Let’s take a closer look.

Example:

$250K Loan 
Time Frame Percentage Expected Payment Change Over Time
Couple years ago 3.75% $1,158
Now 9% to 11% 

(depending on LTV)

 $2,011 $853 

Payment Increase 
In the Future 7% 

(you refinance $2,011 principle)

 $1,663 $348

Cash flow increase 
The Optimus  5%

(Looking if it dropped from 9% to 5%)

 $1,342 $669 

Cash flow increase 

In this example it is clear to see why rental properties fail to cash flow, especially with a DSCR loan. The increasing rates have caused payments to increase as well. When combined with ever rising taxes and insurance expenses, investors are struggling to break even, let alone create cash flow. All of these pressures are making it harder to be successful in real estate investing. 

Why is it a good time to buy?

So, why is it a good time to buy? My suggestion for investors is that they need to find something that has good equity and at 25% to 30%. As long as it is breaking even, then in a year or two when rates go back down, you will be able to refinance to increase your cash flow without buying another property. The more affordable the homes are, the bigger the market becomes. The good news is that buyers are going to start buying again, and the values around you are going to increase.. While no one can predict that the interest rates will go back down to 2.5% for owner occupied and 3.75% for investors, there are indications that interest rates will drop in 2024. 

What’s next?

I will be doing a follow up video that will further show you the effect that interest rates have on cash flow. This will include a look from the buyers side, and how the market is going to push up your values. If you can find a good undervalued property now, then you are going to not only create cash flow, but create generational wealth as well. You’re not alone! There are a lot of people who are questioning if they should buy now. 

Watch our most recent video about why rental properties fail to cash flow and how you can set yourself up for success by investing now.

Do you have questions about DSCR loans or how you can create generational wealth? Contact us today!

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5 Major Roadblocks in Real Estate Investing Solutions Revealed

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5 Major Roadblocks in Real Estate Investing

Did you know there are 5 major roadblocks in real estate investing? From buying and holding rentals, to flipping properties, to dividing land, investors face numerous roadblocks that create frustration, and lead to defeat. But fear not! When investors identify these 5 roadblocks, they can ease their frustration, prevent a finance wall, and learn how to create consistent cash flow.

We work with many clients, including those who are just starting out on their real estate investment journey, to those who have become experts. Every day, our company receives numerous calls  from people saying, “I wish I would have,” or “I wish I did that too.” Therefore, we’ve  created a guide to help others skip bumps in the road that can impact their success. When you’re aware of these 5 roadblocks, do your research before embarking on your real estate journey, and reevaluate quarterly, the sky’s the limit.

So, what are the 5 Major Roadblocks that cause burn out, financial hemorrhaging, and, unfortunately, defeat? Well, here’s what you need to know to make your real estate investments successful.

5 Major Roadblocks:

1. Cash Flow 

The first roadblock that can greatly affect your success is not understanding the importance of cash flow. If your property’s expenses outweigh your profits, then that’s going to hurt you and your business. You want to make sure your profits are always greater than your expenses. The best way to avoid this roadblock is to make a plan and know your numbers upfront! Don’t dive into an investment before you know if your property will cash flow. 

2. Escrow 

The second roadblock every investor should understand is escrow. Escrow is a portion of the loan a lending company puts aside for repairs to the property. The only way to access these funds is to submit receipts, photos, and other proof to your lender that the repairs are underway. So, if you want to optimize your profits and avoid missing the market when it’s “hot,” you need to take all repair costs into consideration, make sure you have money to get the repairs started without your lender’s help, and complete repairs quickly and correctly.

3. Too Many Projects

The third roadblock is having too many projects. From multiple property costs to paying contractors, investors can get too big too fast. It is important to “err on the side of caution” to prevent the “finance crunch” that often occurs. So, slow down, be realistic, and limit your losses. 

4. Rentals

The fourth roadblock is navigating rental cash flow. The deal needs to be a positive investment not a negative one after considering all costs. These costs include rents, taxes, and insurance. In real estate investing, you cannot afford losses or simply break even. The numbers game is intense! It is vital that you are prepared and learn the ropes!

5. Personal Credit Usage

The fifth and final roadblock is the misuse of personal credit cards to cushion purchases or expenses. If you want to avoid spiraling into debt, then quickly set up your business and begin using a business credit card. Business credit cards are easy, fast, and make every investor’s life easier. 

At the end of the day, the ultimate goal is keeping personal and business expenses separate. It’s vital to a successful real estate investing.

Watch our latest interview to discover more about the 5 Major Roadblocks

 

Want more information on real estate investment roadblocks or have any other questions? Contact us today! 

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Investing in Rental Properties: DSCR Loans

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If you’re new to investing in rental properties, understanding how DSCR loans work is essential.

In the investment world, rental properties are a great source of wealth. The financial potential in fixing up places to then rent out is a very lucrative model, especially in the current housing economy.

What is a DSCR Loan?

DSCR loans are specifically designed for real estate investors who hold rental properties. 

The acronym literally stands for Debt-Service Coverage Ratio which is a fancy way of saying that the loan cares about the cash flow of a property.

The great news, especially for new investors, is that accessing these loans is less dependent on personal or business income. Even if you’ve just begun a new business, qualification for DSCR depends almost entirely on the potential value and expenses of the rental property itself. 

What is a DSCR Ratio?

The DSCR ratio is a simple calculation that compares income to expenses—the cash flowing in vs. the cash flowing out—on a single property.

Essentially, a DSCR ratio of 1 simply means that the income and expenses equal each other.

The DSCR ratio measures the break-even point of your investment. So long as you bring in the same amount of money as you invest, you won’t lose anything.

However, a DSCR ratio of higher-than-1 is even better. A higher ratio means that you’re bringing in more money than you’re spending—generating cash flow and building wealth.

Use Our DSCR Loan Calculator

To help you find your projected rents, expenses, and ratio, you can use our DSCR loan calculator. It’s a free, user-friendly download that will help you estimate your DSCR ratio to see if your investment property is going to break even.

Once you have an estimate for your ratio, it’s time to start looking for loans. 

Finding a DSCR Loan

Banks typically like to see ratios of 1 or higher. 

However, if you’re investing in rental properties that might not break even, you can often still find a loan, but you might be stuck with higher rates.

You can also check out our website and inquire about the DSCR options we offer. 

 

Read the full article here.

Watch the full video here:

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DSCR ratio and interest rates explained

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DSCR ratio and interest rates explained

Today we are going to discuss the DSCR ratio and explain interest rates. Many investors are intimidated by DSCR loans and are unsure as to where to start. However, the main thing that you need to take into consideration is whether or not the property cash flows. This in turn will have a significant impact on the interest rates for you DSCR loan. Let’s take a closer look! 

Calculating a DSCR ratio. 

Let’s go over how to calculate DSCR quickly and understand what it means for your property. The DSCR ratio is found by comparing a property’s income to its expenses. To clarify, the property’s income is the rent that is received for the property. On the other hand, the expenses include the monthly mortgage payment, taxes, insurance, and HOA. A ratio of greater than 1 means the property is cash flowing, which is what both you and your lender want to see. Also, for a DSCR loan, the higher this ratio is, the better the terms your loan will have.

Negative DSCR Loans

Contrary to popular belief, you can still find a DSCR product for negative cash flow properties. However, these loans come at a higher interest rate.To clarify, a negative DSCR loan is used when someone gets stuck with a property they can’t sell. Under these circumstances, having very little income on the property would be better than none at all. This is why it is imperative that you have a cash flowing property from day one! By taking your time and working through the numbers, you can in turn avoid being stuck with a property that is not helping you to move forward.

Knowing your thresholds! 

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.

Property Income Property Expenses DSCR ratio  Profit  Interest Rate for DSCR
$2,000 $1,590 1.25 25% 7.25%
$1,500 $1,590 .94 9%+

Remember, anytime you can lower the rate, that’s cash flow that goes into your pocket. In this example, 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!

Know your numbers to get ahead! 

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 can you calculate a DSCR ratio quickly?

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

Watch our most recent video to find out more about: How to calculate a DSCR ratio

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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DSCR Loan Interest Rates: Explained

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What can you expect to pay on your DSCR loan interest rates? Here’s what it is (and why it matters).

You can still find a DSCR product for ratio 1 or negative cash flow properties.

DSCR loans have certain ratio thresholds. When you break these thresholds, your rate gets better. And better rates mean lower monthly payments. Which means… more cash flow!

Let’s go over some of these thresholds for DSCR loan interest rates.

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 about this is that the property is profiting 25% over the expenses. That’s good for the underwriter (and it’s good for you), so you’ll get a lower interest rate.

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

DSCR Loan Interest Rates for a 1 or Lower Ratio

If a property has negative cash flow, say 0.94, 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 in DSCR Loan Interest Rates

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.

Read the full article here.

Watch the video here:

https://youtu.be/o5js06y–qM

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