DSCR LOAN and 100% financing?
I'm looking at a 6 flex in Kansas City. It looks like a ratio of 1.46. I wonder if at 1.46 with zero down is that even possible to 100% finance? I would rather fully fund it and have the reserves of income in order to add to my portfolio. If I sell a home I could put up to 30% down however, I'd rather not tie those funds up and would rather have the reserves.
@Jonathan Wildy, even if you're correct about the 1.46 DSCR at 100% funding, it will still be near impossible to get. Almost all lenders want you to have skin in the game, and some leeway should a deal or the market go sideways.
true but my current bank wants 30%... I was hoping for 10% or less
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DSCR lenders have been pulling back on the 5-8 product, but absolute max on LTV will be 75% (25% down)
I've never heard of someone doing 100% finance, the max goes from 70 to 80% depending on the lender. I recommend getting one with the 80% and going from there, if you need an excellent leader just let me know, I can help you with that!
agree with the rest of the commentors. you will be at a 70-75% LTV you will need to have skin in the game. things that effect LTV(credit score, Number of units and DSCR)
Quote from @Jonathan Wildy:
I'm looking at a 6 flex in Kansas City. It looks like a ratio of 1.46. I wonder if at 1.46 with zero down is that even possible to 100% finance? I would rather fully fund it and have the reserves of income in order to add to my portfolio. If I sell a home I could put up to 30% down however, I'd rather not tie those funds up and would rather have the reserves.
Jonathan: No one in the D.S.C.R. space will give you 100 percent financing. The ratio has nothing to do with it. All lenders require some skin in the game or, government insurance. In fact, at the moment lenders are tightening their guidelines. Some commercial banks are at 70 percent LTV on more risky collateral. (i.e. office buildings, restaurants etc.) If you do not want to contribute your own capital, you can find a JV partner and give up some of your equity position, for the down payment. Good luck.
The only way that you can achieve this, that I know of, is if you buy the property at a discounted price (say $120000) and then wait six months before doing a cash out refinance. If you wait six months you can now use the current appraised value. This means if the property appraises at $150000 and you do 80% LTV you get $120000 back.
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Real Estate Agent TX (#745809)
- Royal Equity Property Management
Quote from @Jonathan Wildy:
I'm looking at a 6 flex in Kansas City. It looks like a ratio of 1.46. I wonder if at 1.46 with zero down is that even possible to 100% finance? I would rather fully fund it and have the reserves of income in order to add to my portfolio. If I sell a home I could put up to 30% down however, I'd rather not tie those funds up and would rather have the reserves.
It could be possible if you do a cross collateralized hard money loan. This would assume you have enough equity in your other investment property and you have an exit strategy after 2 years.
