Any recommendations for a DSCR lender?

Question

Hello!Sorry if this is the wrong subforum to ask this...Anyone have any DSCR lenders they could recommend? I'm not sure if this is possible, but do DSCR lenders loan up to 90% LTV or is every lender around the 70%-80% mark? I'm primarily a fix n flipper type of investor and come across of a lot of great multi family deals in my area. Only issue is that I don't wanna go deep into my pockets, like a 20% down payment jusstt yet. Most multifamily properties go for around the 700k mark around me, so dishing out a $140k down payment kinda slows down my flipping business. If 90% is unrealistic, then i'd still like a recommendation of a DSCR lender, in the case I come across a multifamily building I really like that i'm willing to go crazy on haha. Also, a lender that is able to do 5+ units as most multi family buildings I come across are usually 6 units.Thanks!

Robin Simon · Answer

Yes - DSCR Lenders are typically going to be maximum LTV of 80% and Cash-Out Refinances maximum DSCR of 75%.  A tiny few are coming back to 85% for acquisitions, but it is mostly a mirage because no properties cash flow and qualify at 85% at today's rates and values.

Regarding Multifamily, generally "Multifamily" is considered around 5-10 Units for Multifamily DSCR Loans - these are typically going to be minimum 25% down however.  I'd recommend this article published on BP on all about Multifamily DSCR Loans which are a pretty good option and might be a great fit for you if you are seeing a lot of Chicago area properties in the six range (think this is a very underrated niche!)

https://www.biggerpockets.com/blog/multifamily-dscr-loans

Caroline Gerardo · Answer

80% for most scenarios on a purchase 75% refinance... call for ins and outs rules

85% for seasoned investor /721 middle mortgage FICO/ property lease at closing with $ most states/ funds from your checking are seasoned 60 days and tracked/ 12 months reserves on top/  minimum floors on loan amount/ market rents verified ... with a few other no exceptions rules

Jayson Cain · Answer

Hi Faiz, I'm based in Southern California, but I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of Short Term Rentals and Long Term Rentals.

I've also helped other investors with their DSCR loans and flip projects. Happy to share my experiences and chat with you more if you're interested.

Brendan Bunce · Answer

I'm DSCR and Fix & Flip wholesale lender. If flipping is the goal why not finance both the acquisitions and the rehabs? I can do 5+ units. Each unit needs a $45k min ARV and to pass a 7% or 8% debt yield test. Max initial LTC is going to be 85% if you can show 6-10 successful RE investments in the last 3 years. It will be 90% if you can show 11 or more. Those investments can include recent sales, retained investment properties and major renovation projects.

Or do a Fix & Flip line of credit. Based on experience level, you get approved for 3-10 times the amount of liquidity you're able to show and then just leverage that line to scale your business and keep multiple projects in motion at the same time.

Erik Estrada · Answer

Hey Faiz,

If the property needs rehab, you may want to consider a bridge loan. For 5+ Unit properties, lenders may go up to 80% LTC as long as the Loan to ARV is not over 70% and you have experience rehabbing 5+ unit properties. Otherwise you might expect 75-65% LTV on a bridge loan.

If you are looking for a long term loan. Many lenders will allow 75% LTV as long as the property is 70% occupied and the property debt services with a 1.00 DSCR.

Jonathan Klemm · Answer

Hey there @Faiz Kanash - I have several local Chicago DSCR lenders that I can share with you.

I think like most others have pointed out it's nearly impossible to find a DSCR loan at 90% and highly unlikely to find one at 85%.

Which area of Chicago are you purchasing properties?  Are these properties typically stabilized or you are going in and doing renovation and leasing them up?

Any recommendations for a DSCR lender?

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