Is anyone else using higher DSCRs to qualify loans?

I'm seeing some of my lenders starting to use a DSCR of 1.4 to qualify loans on certain properties (mostly on hotels, strip malls, and office buildings).
Is anyone else running into this?

Edited: 06/26/2010 at 08:12AM

Todd Hart

Commercial Lender · Lone Tree, Colorado

12 posts
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May 13 '09, 09:29 AM

Darryl

We are still underwriting some of our loans at 1.20+ and 1.25+ DSCR depends on several factors. Give me your email and I will send you my wholesale rates and program matrix. Also, every loan you close with me I will provide you with leads to close another at equal value (2 for 1 deal).

Edited: 06/26/2010 at 08:13AM

James Hiddle

Real Estate Investor · Altus, Oklahoma

2,567 posts
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May 13 '09, 10:26 AM

Originally posted by Todd Hart

Darryl

We are still underwriting some of our loans at 1.20+ and 1.25+ DSCR depends on several factors. Give me your email and I will send you my wholesale rates and program matrix. Also, every loan you close with me I will provide you with leads to close another at equal value (2 for 1 deal).

What are you requirements for a commercial loan these days?

Edited: 06/26/2010 at 08:13AM

Dory Peters

Real Estate Investor · dc, Washington D.C.

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May 14 '09, 08:22 PM

Originally posted by Darryl Dahlen

I'm seeing some of my lenders starting to use a DSCR of 1.4 to qualify loans on certain properties (mostly on hotels, strip malls, and office buildings).
Is anyone else running into this?

It also depends upon the property type. I normally try to structure all of my deals to have at least a DCR of 1.4. I just learned from a private money lender about a week ago that some lenders are looking for DCRs of 1.5 for strip malls and officee buildings (which are seen as more risky right now) vs DCRs of 1.25 for multi-family properties (ie apartments).

Edited: 06/26/2010 at 08:13AM

Tony Phillips

Commercial Real Estate Broker · Houston, Texas

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May 16 '09, 01:26 AM

It depends on the lender and the property type. We represent several life companies and they are lending at 1.25 DSCR but their LTV's are 60-65%. Hotels are tough right now and I have seen those quoted at 50% LTV and a 1.40 DSCR. Must be a flagged hotel.

Edited: 06/26/2010 at 08:14AM

Dory Peters

Real Estate Investor · dc, Washington D.C.

393 posts
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May 16 '09, 01:31 AM

Originally posted by Tony Phillips

It depends on the lender and the property type. We represent several life companies and they are lending at 1.25 DSCR but their LTV's are 60-65%. Hotels are tough right now and I have seen those quoted at 50% LTV and a 1.40 DSCR. Must be a flagged hotel.

Yes, that also matches the quotes I've seen.

Edited: 06/26/2010 at 08:14AM

Todd Hart

Commercial Lender · Lone Tree, Colorado

12 posts
50 influence

May 17 '09, 08:02 AM

For our Multifamily 5+ Units, Mixed Use & Mfg Home Parks are using the following DSCR which affects pricing mostly:

5yr fixed program:
1.20 DSCR to 75% to get a 6.05% under $3mill or 5.77% over $3 mill
1.35 DSCR to 65% to get a 5.91% or 5.63% over $3mill
1.55 DSCR to 55% to get a 5.71% or 5.47% for over $3mill

For our 75% Owner occupied Commercial Program B, We use this:

DSCR Based on two methods and property must pass both
1. Minimum 1.25 DSCR based on the underwritten EBITA of the small business concern.
2. Minimum 1.00 DSCR based upon the underwritten NOI. The lower of actual vs. Market Rents and the greater of actual vs. market expenses will be used to develop the underwritten NOI.

$500K to $5 million
75% LTV, Purchase and Refinance (Cash Out and Rate and Term)

Edited: 06/26/2010 at 08:15AM by Todd Hart