DSCR Loan – 2% Broker Origination Fee – Is This Normal?

[Ryan Miller]

I’m working on a 10-property (13-unit) portfolio deal. The contract price is $2 million, and the appraised value is around $2.24 million. We have 20% down and everything has been moving along smoothly.

However, I just received the final numbers from the lender and noticed they've included a 2% broker origination fee on this loan. It's a DSCR loan, and while I've closed many conventional and investor loans in the past, this is my first DSCR product.

In all my previous deals, origination fees have typically ranged from 0.25% to 0.5%, so this caught me off guard.

Is a 2% broker fee standard or reasonable for DSCR loans? Or should I be negotiating this down?

Appreciate any insight from others with DSCR experience.

[Nick Belsky]

@Ryan Miller

For 10 Properties, that is a little on the high side, but its also a lot more work than doing a single property.  I'd be 1.5-1.75% on something like provided there isn't a bunch of "hair" in it.  Blankets can be a huge amount of work.  While 2% seems a bit high, it isn't crazy high.

With that said, all brokers are not created equally.  I play quarterback and coordinate all parties when I broker.  Many (probably most) do not and leave all the heavy lifting to the lender or 3rd parties and sit back expecting a check for doing as little as possible.

Cheers!