Debt Service Loans DSCR

[Sam Booth]

Hi all,

I have purchased a few rentals with my income but now want to move to purchasing based on the rent the property would give. Do you have any recommendations for lenders in Alabama?

[Stephanie P.]

Quote from @Joseph Coleman:

Hi @Sam Booth!

I have heard good things about,

LendingOne (direct lender)
Civic (direct lender)
Aloha Capital (direct lender)
Investor Property Loan (broker) 

There are many DSCR based lenders out there and most of them get their capital from the same source. I would reach out to several to compare the rate and terms and make sure to ask about what could change between receiving your quote and locking in your rate as rates have been consistently moving up and are expected to continue upward.

Feel free to message me with any additional questions. 

 @Sam Booth

Full disclosure.  I'm biased toward brokers because I am one.

Reaching out to several DSCR lenders will be exhausting, could damage your credit score because of multiple credit pulls and subsequently cause you to get a higher rate/lower ltv on your loan. Instead of chasing lenders, find a good broker. @Joe Coleman's list is okay, but Investor Property Loan is the only broker. They're all over Biggerpockets as is US Commercial (my company), BRRRR and several others. Your time will be better spent researching threads to see if the person knows what they're talking about and then contacting them. Going to a direct lender will limit you to their guidelines. For example if you're looking for a loan with short seasoning (below 3 months on title) Civic will allow it, but they'll limit you to 90% of the original purchase price or 75% of the current appraised value whichever is less. Comparatively, you're better off waiting the 3 months and going with a different lender that can give you either a 30 year fixed or a 40 year interest only at the same rate as their 5/1 ARM. If you're looking at a multi family and consider using LendingOne, they have minimum loan amount for the number of doors so they wouldn't be a good choice if the loan amount is smallish. The point is each one has their own quirks and a good broker will be able to let you know which lender will work for you. I tell borrowers that these loans are like Plinko on The Price is Right. You're like the chip they drop into the top of the board and the pegs are inherent pitfalls of the loan. We interview you in the beginning (all good brokers do) to find out your approximate credit score, your available liquidity, the approximate value, when you purchased the property, whether the property is ruralish or not and myriad other things to find out which lender is going to work for you, then we give you a rate quote based on the lender that will be able to close your loan.

Hope that helps.

Stephanie