Long-term financing for build to rent

[Trevor Davis]

I am planning on building a rent house in a small town about one hour east of OKC. I am going to use cash and small lines of credit to fund the build but would like to go permanent financing after the build. I can build it for $100 a square foot and it should appraise at $145-$150 a square foot based off the latest comps in the area. Local rent would be $1300-$1350. I would like to keep at least 25% in the deal and cash out the remaining so that I can pay off accrued debt and use the remainder of the cash to reinvest. Should I use a DSCR loan for this or pursue a local bank for long term financing? I am hoping to avoid a very long seasoning period since I will own the property. Just looking for advice or help seeing anything that I am missing. Thank you.

[Patrick Roberts]

The best type of loan will largely come down to comps and your personal ability to get financing. Conventional loans or bank portfolio loans are usually the best deal from a bang for the buck perspective, but these typically come with Conventional underwrites - personal income, DTI, etc. DSCR loans will not have a lot of these same requirements, but will likely be more expensive options.

Since this is a new build, make sure there will be sufficient comps for a normal loan (Conv, DSCR, etc). If you're building a unique property (think barndominium or something like that), or building in a rural/undeveloped area, you may have an issue with getting a loan due to lack of comps no matter how good your personal financial situation is.