Unwarrantable Condo Deal: DSCR Loan, STR-Approved, and Still Cash-Flowing

[Marius Olbrych]

Wanted to share a recent investor case study that might be helpful for others evaluating short-term rental (STR) markets or dealing with financing challenges on non-traditional properties.

We recently supported a buyer who closed on an unwarrantable condo in the Palm Springs area. The property isn't eligible for conventional financing due to HOA and occupancy ratios, but here's what made it work:

🔹 DSCR loan was used — no tax returns required
🔹 7-day STRs permitted by the HOA
🔹 Closed $10K under appraised value
🔹 Fully financed, and still cash-flowing from day one

The buyer was doing a 1031 exchange and wanted a turnkey rental that could hold up even if short-term rental regulations shifted. This one penciled out with long-term potential due to its location and rental flexibility.

Lessons learned:

• DSCR loans are powerful tools when conventional isn't an option, especially for non-warrantable assets.

• Underwriting still allowed this to cash flow based on projected rental income.

• Getting something under appraisal and financed fully is still possible — even in this market — if you’re looking in the right pockets.

Has anyone else worked with unwarrantable condos or similar niche assets in resort markets? Curious how others are structuring deals like this or planning for STR regulation changes.

Looking forward to your thoughts and strategies.