DSCR refinance question for 8-unit lease-up deal

[Jasmin Saavedra]

Hi everyone,

I'm working on an 8-unit value-add property and had a question about DSCR refinance timing.

Current status:

• 6 units fully renovated
• 5 units currently leased
• 6th unit about to be leased (~$1,200)
• Remaining 2 units still in rehab

Stabilized rents should be around ~$7,800/month.

My question is:
At what point would most DSCR lenders consider a property like this "stabilized" enough to refinance?

Would lenders typically:

• Require all units to be leased first, or
• Consider market rents / near-term lease-up?

Also curious if anyone has successfully refinanced in a similar lease-up stage.

Appreciate any insight or experience — thank you!

[Stacy Raskin]

Depends on the amount of units that are at the property as DSCR mortgage brokers and lenders often have different loan programs depending on how many units are part of the property. There are 1-4 unit DSCR programs that are more lenient on vacancies compared to 5-8 unit programs that generally have stricter guidelines on vacancies where some DSCR programs may only allow one or less vacancy for a 5-8 unit program.

The units also have to be in rent ready condition so when the appraiser goes out there he will mark the condition as "as is" versus "subject to" getting repairs done or rehab completed in order to close the loan. If the appraiser marks the appraisal as "subject to," the appraiser will have to go out again to make sure the repairs are done and do a report addendum. So the rehab has to be done if you are trying to get a DSCR loan.

It can be helpful to work with a mortgage broker who specializes in DSCR loans as experienced ones have relationships with wholesale lenders who specialize in DSCR loans which can help an investor find programs with LTV, rates and program guidelines that are more favorable to the investor.

Generally a 5-8 unit DSCR loan will be a more detailed underwrite compared to a 1-4 unit DSCR loan. Happy to connect to discuss further.