LTV is good but DSCR is too low for refi

2 Replies

So my primary holdings are historic, multi-use properties in Louisville (KY). My partners & I bought these buildings in a state of high distress at low prices, and have been continuously & incrementally improving them over the last 8 years. We have great credit, reliable mortgage payments -- our interest rates are just too high in the present market.

Because these are long-term investments, we've never pulled a profit on our buildings. In fact, we contribute each month to capital improvements. Rental income is good now and the assets are solid (tremendously better than when purchased), but our debt-service coverage ratio is too low for underwriting of the banks we've dealt with trying to refinance. Of course, lower payments would only improve our cashflow, but this logic seems irrelevant to a loan officer.

Any suggestions?

It sounds like you own in Old Louisville - I haven't had any problems getting loans at about 100x the rental income at 80% LTV (i.e. $2K in rent = $200K in value, loan amount of $160K).

Are you trying to get significantly more money than this or are you having problems with valuation?

More info on total units/rents and what your perceived valuation is would be helpful.

Hey, give us an idea of the property, address, rents, what you think it will appraise for, your equity position, and what you are trying to do. Michael and I have several rentals (not together) in that area.

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