Loan for second rental property
Member since 2024 · 29 posts · 11 votes
Loan for second rental property
Most Popular Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 494 votesIf an investment property can go the income route where your debt to income is analyzed or go the DSCR route.
Some DSCR lenders will go down to a $75K value and a $55K loan amount. It's the same work to do a $55K loan as a $500K loan so the fees will be higher due to the loan amount but will still be much lower than what a lender or broker gets paid on a higher loan amount. $100K and above loan amounts will get you more lender options.
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.
Happy to connect to discuss further.
Bright Skyline518 Reviews
37 Replies
- Lender · Nationwide · Member since 2024 · 9 posts · 2 votes2yWhat would you be using as collateral for the loan?
- 2yKo KashiwagiPro MemberLender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
Hi Ayyoub,
What kind of purchase would this be? Primary residence or a rental? You could put both names or create an LLC if it's a rental.
- Lender · Member since 2021 · 495 posts · 130 votes2yHey there, nice to see someone in my local area! Are you looking to use a conventional loan? If so, who has a better debt to income ratio to consider? Or as others have said, you could use other financing and buy in an entity.
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
happy Friday! - 2yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
Going to depend what route you go through (conventional - or DSCR with an LLC etc.) also I believe what state you are in matters - states can vary how they treat marriages and guarantor / requirement rules
Harpoon Capital512 Reviews - Member since 2024 · 29 posts · 11 votes2yHi, thx Andrew. Same here, happy to see a local investor. This would be another rental property. Not sure what are other options but was thinking about conventional loan. Both of us more or less same income debt ratio. What are other options? Any learning material link/book/video I can go through to learn more about them?
Quote from @Andrew Zamboroski:
Hey there, nice to see someone in my local area! Are you looking to use a conventional loan? If so, who has a better debt to income ratio to consider? Or as others have said, you could use other financing and buy in an entity.Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
happy Friday!
happy Friday! - Member since 2024 · 29 posts · 11 votes2yHi Robin, thx! This would be for buying rental property. For Dscr with an LLC, the lenders are ok to give this type of loan to an LLC? For conventional loan, our previous lenders did not accept it.
Quote from @Robin Simon:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
Going to depend what route you go through (conventional - or DSCR with an LLC etc.) also I believe what state you are in matters - states can vary how they treat marriages and guarantor / requirement rules
- Member since 2024 · 29 posts · 11 votes2yThis would be rental property. We have an LLC but our previous lenders did not accept to put conventional loan under an LLC.
Quote from @Ko Kashiwagi:
Hi Ayyoub,
What kind of purchase would this be? Primary residence or a rental? You could put both names or create an LLC if it's a rental.
- 2yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Ayyoub Feza:
This would be rental property. We have an LLC but our previous lenders did not accept to put conventional loan under an LLC.Quote from @Ko Kashiwagi:
Hi Ayyoub,
What kind of purchase would this be? Primary residence or a rental? You could put both names or create an LLC if it's a rental.
If in an LLC - it doesn't really matter who gets the loan then since the borrower on the DSCR Loan will be the LLC entity - not either you or your wife as an individual.
DSCR Lenders can vary by treatment of who is required to guaranty the loan (generally around 25% ownership, >51% total) and which credit score is used for qualifying
Harpoon Capital512 Reviews - Lender · Member since 2021 · 495 posts · 130 votes2yIf you have the same dti and both have enough room for the additional house, either of you should be able to purchase it. The other alternative would be a DSCR loan to your entity with both or either as a personal guarantor.
Quote from @Ayyoub Feza:
Hi, thx Andrew. Same here, happy to see a local investor. This would be another rental property. Not sure what are other options but was thinking about conventional loan. Both of us more or less same income debt ratio. What are other options? Any learning material link/book/video I can go through to learn more about them?Quote from @Andrew Zamboroski:
Hey there, nice to see someone in my local area! Are you looking to use a conventional loan? If so, who has a better debt to income ratio to consider? Or as others have said, you could use other financing and buy in an entity.Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
happy Friday!
happy Friday! - Member since 2023 · 347 posts · 190 votes2y
Hi Ayyoub!
I'd recommend creating an LLC with both of you on it! You can then get a HML, put the rental in that LLC so it protects all of your other assets. A lot of investors will create new LLC's for each rental, so that in the case of default, they can only go after what is in the LLC that owns said rental. I'd love to hop on a call to go over this more in-depth.
- 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
LuxePrivate Investments LLC 572 Reviews - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
Hurst Real Estate, INC4.987 Reviews - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
LuxePrivate Investments LLC 572 Reviews - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Hurst Real Estate, INC4.987 Reviews - Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 460 posts · 250 votes2y
Hi Ayyoub-
Great question and I am right up the road from you in Ann Arbor.
Certainly, getting a conventional loan may provide slightly better rates than an investment loan like a DSCR loan.
However, if you are buying income property you can use the income to qualify for the loan with a DSCR or Debt Service Coverage Ratio loan and not so much your personal finances like a conventional loan.
Basically, you need three things.1. Decent credit. 2. The income from the property to pay the mortgage. 3. The down payment funds.
Additionally, you can get as many DSCR loans as you would like; whereas, with conventional, you are capped at 10 properties per individual, usually, unless you pay one property off for example.
Lot to like about DSCR loans.
To your success!
- Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes2y
@Ayyoub Feza depends on what loan you will be using. If conventional, whomever has the higher income and lower debt for DTI purposes. For a DSCR loan, whomever has the higher FICO score, i since these loans use FICO, Experience and property numbers to determine rate and LTV.
- 2yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 494 votes
If an investment property can go the income route where your debt to income is analyzed or go the DSCR route.
Some DSCR lenders will go down to a $75K value and a $55K loan amount. It's the same work to do a $55K loan as a $500K loan so the fees will be higher due to the loan amount but will still be much lower than what a lender or broker gets paid on a higher loan amount. $100K and above loan amounts will get you more lender options.
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.Happy to connect to discuss further.
Bright Skyline518 Reviews - Member since 2024 · 29 posts · 11 votes2yThanks Stacy for the answer and very detailed examples. It helped a lot.
Quote from @Stacy Raskin:
If an investment property can go the income route where your debt to income is analyzed or go the DSCR route.
Some DSCR lenders will go down to a $75K value and a $55K loan amount. It's the same work to do a $55K loan as a $500K loan so the fees will be higher due to the loan amount but will still be much lower than what a lender or broker gets paid on a higher loan amount. $100K and above loan amounts will get you more lender options.
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.Happy to connect to discuss further.
- 2yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 494 votes
Quote from @Ayyoub Feza:
Thanks Stacy for the answer and very detailed examples. It helped a lot.Quote from @Stacy Raskin:
If an investment property can go the income route where your debt to income is analyzed or go the DSCR route.
Some DSCR lenders will go down to a $75K value and a $55K loan amount. It's the same work to do a $55K loan as a $500K loan so the fees will be higher due to the loan amount but will still be much lower than what a lender or broker gets paid on a higher loan amount. $100K and above loan amounts will get you more lender options.
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.Happy to connect to discuss further.
You're welcome-happy that you found it useful.
Bright Skyline518 Reviews - Member since 2024 · 29 posts · 11 votes2yHi Jeff from Rochester area, thx for answer and yes this would be rental property. I am learning about DSCR and this option looks interesting.
Quote from @Jeff Roth:
Hi Ayyoub-
Great question and I am right up the road from you in Ann Arbor.
Certainly, getting a conventional loan may provide slightly better rates than an investment loan like a DSCR loan.
However, if you are buying income property you can use the income to qualify for the loan with a DSCR or Debt Service Coverage Ratio loan and not so much your personal finances like a conventional loan.
Basically, you need three things.1. Decent credit. 2. The income from the property to pay the mortgage. 3. The down payment funds.
Additionally, you can get as many DSCR loans as you would like; whereas, with conventional, you are capped at 10 properties per individual, usually, unless you pay one property off for example.
Lot to like about DSCR loans.
To your success!
- 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Some of the clients that I work with like the ability to have an easier time qualifying for business lines of credit, business cards, or other forms of credit that is not specifically a mortgage or real estate related. The fact that it does not report on their personal credit helps them out with other forms of financing. Especially if they have 10+ of these loans active at the same time.
LuxePrivate Investments LLC 572 Reviews - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Some of the clients that I work with like the ability to have an easier time qualifying for business lines of credit, business cards, or other forms of credit that is not specifically a mortgage or real estate related. The fact that it does not report on their personal credit helps them out with other forms of financing. Especially if they have 10+ of these loans active at the same time.
hmm...well, as someone who has 20+ million in warehouse lines of credit I do know that it would still be fraud not to include those loans on the application/quarterly financial statements that are required for business credit.
But, ok, sure, but you are saying that just because the loan is not on your credit report has no advantage when applying for the next mortgage correct? I have seen this stated on this board and have heard it parroted back by newbie investors, and this myth needs to end. It is (and I am sure has) created a lot of rude surprises when folks go to buy a primary home etc. Same as an LLC with a personally guarantee magically takes away the liability from the personal balance sheet as well.
Hurst Real Estate, INC4.987 Reviews - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Some of the clients that I work with like the ability to have an easier time qualifying for business lines of credit, business cards, or other forms of credit that is not specifically a mortgage or real estate related. The fact that it does not report on their personal credit helps them out with other forms of financing. Especially if they have 10+ of these loans active at the same time.
hmm...well, as someone who has 20+ million in warehouse lines of credit I do know that it would still be fraud not to include those loans on the application/quarterly financial statements that are required for business credit.
But, ok, sure, but you are saying that just because the loan is not on your credit report has no advantage when applying for the next mortgage correct? I have seen this stated on this board and have heard it parroted back by newbie investors, and this myth needs to end. It is (and I am sure has) created a lot of rude surprises when folks go to buy a primary home etc. Same as an LLC with a personally guarantee magically takes away the liability from the personal balance sheet as well.
That’s not what I am saying LOL. You still have to disclose your debts when applying for a primary or another investment property mortgage. I am not saying you don’t have to disclose those debts to any other mortgages or business loans you apply for. Don’t twist my words for no reason.
I am just echoing what many of my clients like, and that is that the DSCR loan does not show up on their credit report.
LuxePrivate Investments LLC 572 Reviews - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Some of the clients that I work with like the ability to have an easier time qualifying for business lines of credit, business cards, or other forms of credit that is not specifically a mortgage or real estate related. The fact that it does not report on their personal credit helps them out with other forms of financing. Especially if they have 10+ of these loans active at the same time.
hmm...well, as someone who has 20+ million in warehouse lines of credit I do know that it would still be fraud not to include those loans on the application/quarterly financial statements that are required for business credit.
But, ok, sure, but you are saying that just because the loan is not on your credit report has no advantage when applying for the next mortgage correct? I have seen this stated on this board and have heard it parroted back by newbie investors, and this myth needs to end. It is (and I am sure has) created a lot of rude surprises when folks go to buy a primary home etc. Same as an LLC with a personally guarantee magically takes away the liability from the personal balance sheet as well.
Also,
Is that warehouse line of credit for one business you own? Or several others? Did you have to disclose those debts from one business you own to another completely different line of credit for another business?
I’m not a credit expert by any means, but curious to know if you still have to disclose debts on a business that is completely unrelated to another business you own.LuxePrivate Investments LLC 572 Reviews - 2yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Jay Hurst:
Quote from @Erik Estrada:
Quote from @Ayyoub Feza:
Hi,
We have one loan for my house under my name, another loan for a rental property under my wife name. So if we want to buy another rental property who do you suggest to get the loan? Myself or my wife? We have same credit score/history. Any suggestions/opinion will be appreciated.
Regards
You can easily structure this scenario on a DSCR based loan and have the loan guarantor with the highest score be the only person to qualify while closing in an LLC owned by you and your wife.
Rates on DSCR are nearly the same as a conventional investment property loan. Sometimes even lower depending on the DSCR ratio and LTV. Best of all is that they do not show up on your credit report.
so, if it does not show up on a credit report does the loan not exist?
It does not mean it doesn't exist. A lot of clients like that it does not show up on their credit report. There are a few DSCR lenders (usually the ones that offer trid loans) that do have their DSCR loan show up on the borrower's credit report. Several others don't.
Understand, as I have originated DSCR loans since back when they were called investor cash flow loans, but my question is what does the fact that the loan is not showing up on the credit report make it the "best part"? and why are a lot of your clients led to believe that the credit report matters at all? I am a private lender as well lending my own funds, and I also do not report to the credit agencies, but does that mean my loan does not really matter or exist on the next application?
Some of the clients that I work with like the ability to have an easier time qualifying for business lines of credit, business cards, or other forms of credit that is not specifically a mortgage or real estate related. The fact that it does not report on their personal credit helps them out with other forms of financing. Especially if they have 10+ of these loans active at the same time.
hmm...well, as someone who has 20+ million in warehouse lines of credit I do know that it would still be fraud not to include those loans on the application/quarterly financial statements that are required for business credit.
But, ok, sure, but you are saying that just because the loan is not on your credit report has no advantage when applying for the next mortgage correct? I have seen this stated on this board and have heard it parroted back by newbie investors, and this myth needs to end. It is (and I am sure has) created a lot of rude surprises when folks go to buy a primary home etc. Same as an LLC with a personally guarantee magically takes away the liability from the personal balance sheet as well.
That’s not what I am saying LOL. You still have to disclose your debts when applying for a primary or another investment property mortgage. I am not saying you don’t have to disclose those debts to any other mortgages or business loans you apply for. Don’t twist my words for no reason.
I am just echoing what many of my clients like, and that is that the DSCR loan does not show up on their credit report.
Many borrowers have been led to believe that if the loan does not show up on a credit report or close in a LLC that it does not have to be disclosed. I was asking what you thought and you answered. A lot of DSCR lender's on BP do not understand this, so I am glad you do.
But, the fact that it does not show up on a credit report is not something your borrowers should care about one way of another.
Hurst Real Estate, INC4.987 Reviews
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