DSCR loans in Appreciating Markets (High Cost of Living)

[Kevin Arceo]

Has anyone succesfully gotten a DSCR loan on a SFR in an appreciating market (high cost of living), i.e. Bay Area, Los Angeles?

The DSCR loan is predicated on the cash flow covering the debt service, but that seems very unlikely in areas with low or no cash flow.

I can see DSCR loans working in the midwest, but not on the west coast. Am I wrong or?

[Mike Quin]

We got one in Richmond last Spring/Summer 2022. 

Your rent needs to normally EXCEED your mortgage, insurance, and taxes. If you can do that you can get up to 70%-75% of the LTV especially if you have a really good lender like we do.

Normally it works in lower cost areas like the East Bay Oakland/ Richmond/ Antioch/Pittsburg /Concord. Our purchase price was more than 40% below ARV at the time.

We see people doing it all the time getting these loans in the Bay Area on good deals. 

People that think making 2-4 offers on properties on the mls are going to get steal are going to be extremely disappointed. 

You will need to purchase the property at a discount of at least 15-20%. It's not everyday but if you put a lot of serious work and effort into finding a rental (15-20 hours per weeks) and at least write 2-3 offers per month for a year or 1.5 years, it's definitely possible. 

If you need a connection for a lender or eviction attorney feel free to dm me.