What has been your experience with DSCR loans?

19 Replies

What has been your experience with DSCR loans, especially for 2-4 units?

I am planning on using one for the first time. 

@Bernadeau C. They are much easier to qualify for abs get approved since they don't look at your personal income. Since Fannie Mae limited their portfolio of rental properties we are seeing DSCR loans have pretty comparable rates to conventional.

Originally posted by @Bernadeau C. :

What has been your experience with DSCR loans, especially for 2-4 units?

I am planning on using one for the first time. 

 Due to the FHFA Fannie/Freddie penalty, they are no longer a total ripoff relative to Fannie/Freddie. More or less, with the DSCR loans, if you're getting a good deal, you can get approved. The rates/fees vary based on:

- Just how good of a deal are you getting? Lower risk, lower rates and fees.

- How fast does it need to close? The best priced lenders in the DSCR space, needless to say, are swamped with business, and thus closing slower.

Originally posted by @Bernadeau C. :

What has been your experience with DSCR loans, especially for 2-4 units?

I am planning on using one for the first time. 

They close infinitely easier than Fannie/Freddie

If you're closing in Florida, you need an entity like an LLC or S-Corp.

Stephanie

@Bernadeau C. you should be able to get some pretty attractive terms on 2-4 unit properties from a DSCR lender. The process should also be much more straightforward and quicker than other sources of financing. It's important to talk to a few lenders and get a feel for terms and responsiveness.

Originally posted by @Stephanie P. :
Originally posted by @Bernadeau C.:

What has been your experience with DSCR loans, especially for 2-4 units?

I am planning on using one for the first time. 

They close infinitely easier than Fannie/Freddie

If you're closing in Florida, you need an entity like an LLC or S-Corp.

Stephanie

This is not true. I broker in 45 states, with Florida being my third largest market, and half my deals in Florida are closed to individual borrowers with no entities.

Originally posted by @Timothy Hero :
Originally posted by @Stephanie P.:
Originally posted by @Bernadeau C.:

What has been your experience with DSCR loans, especially for 2-4 units?

I am planning on using one for the first time. 

They close infinitely easier than Fannie/Freddie

If you're closing in Florida, you need an entity like an LLC or S-Corp.

Stephanie

This is not true. I broker in 45 states, with Florida being my third largest market, and half my deals in Florida are closed to individual borrowers with no entities.

That's great news for you, but that's not been my experience.  Thanks for letting me know.

Updated about 1 month ago

@timothyhero I just checked with a few of my more active wholesale lenders and you are right; it's not a state requirement, but more of a lenders specific requirement. Some don't require LLC's and a few of them do. Not a big deal, but thanks for prompting me to check.

@Bernadeau C. I work with a lot of these types of investor friendly lenders to build my portfolio and helping others build theirs.  Traditional lenders can make it difficult to scale a rental portfolio quickly.  I never would've gotten to 127 rentals without using these types of lenders.