What DSCR lenders look for in Rental Properties

Question

Consider the following to have an easier time qualifying for DSCR financing:

1. Is the property in a Rural area (typically population sizes under 150,000)

Most DSCR lenders cannot fund in Rural Areas. If it’s a great opportunity, you might get away with seller financing or a private loan.

2. Investing Experience Most DSCR lenders want to see that you have some experience. No first time home buyers allowed. Pricing typically gets better at 5 properties or more on your Schedule of RE.

3. Is there Comps available for your property?

If there are very few properties in the area that you are buying in, that are similar in nature, your appraisal could come in lower than expected. And if it's just out of the ordinary, most DSCR lenders will not finance it.

4. Talk to a broker!

Shopping around is time consuming and you are jeopardizing yourself to the market. Brokers work with wholesale banks and have a strong network of lenders to provide you with the best financing.

Robin Simon · Answer

For #5 definitely - have to sign an affidavit that its not owner-occ or a primary residence at all if its a DSCR loan

#7 - typically $2k of deferred maintenance and C4 or better on the appraisal

Robin Simon · Answer

Rural Areas, a @Zach Edelman speciality!

Erik Estrada · Answer

Great knowing there is someone that can lend in Rural Areas! Reached out to Zach.

Robin Simon · Answer

Yes - best to find yourself a forward-thinking flexible DSCR lender!

Sharing our perspective on this:

-We do rural typically capped at 70% LTV though

-We don't discriminate at all against 1st time investors/buyers

3. Comps are pretty important - generally we need the top 3 to be within 5 miles and have less than 20% net adjustment

4. Agree - get yourself a good broker that has access to a lot of different lenders, they will typically have access to lower rates and fee waivers

Salvador Auciello · Answer

Here is my Experience on DSCR and while we are at it on No DSCR (debt ratio does not matter 0.00) program

1. first time buyer okay on No DSCR

2. Rural same 70% LTV on both DSCR and No DSCR

3. Foreign National can buy 1st time home no experience no USA credit

4. Don't care about experience

5. What a lender looks for is that can be a deal killer is if someone is trying to buy a primary home or refinance a primary home as a no income loan

6. Properties must be pride of ownership condition.  This is not for a fix and flip.

7. Deferred maintenance I have seen lenders allow it under No DSCR however their risk is mitigated generally with high rates.

What DSCR lenders look for in Rental Properties

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