DSCR Lending Needed (No DTI for Guarantors and No Hard Credit Inquiry)

[Zachary Crosby]

Hello,

I am looking for DSCR financing for a layered LLC structure. Some details below.

1. There are 6 equity members in the holding company. The holding company owns the LLC. The LLC will own the property. (6-members --> holding company --> LLC --> property (Michigan))

2. I need a loan facility that does NOT (i) show up on guarantor DTI and (ii) require a hard inquiry on guarantor credit.

3. The agreed upon purchase price is $125k. Looking to put 20-25% down. 4 year PPP (or less, depending on terms).

Please let me know if you can assist me with this. 

Zachary

[Erik Estrada]

Quote from @Zachary Crosby:

@Drew Sygit This type of loan facility exists. I received term sheets with these exact terms and spoke with numerous lenders about this type of facility. It's hard to come by, but it's out there. 

The lender I'm currently working with requires only soft inquiry for guarantors. Just trying to see if other lenders are more competitive with their rates. 

Then just go with them lol. Your scenario is very challenging. 6 Members on an LLC (Most will only allow 4), Layered entity (Most lenders don't lend to these entity structures), And Loan amount is under $100k (A pass for most DSCR lenders)

You are better off building an actual relationship with the lender, biting the bullet and getting favorable terms with volume. 

8% with no points on a Sub $100k loan amount is also a hard ask. You will most likely be at 7.5-8% with 2.5-3pts + lender fees. Maybe 9-9.5% with no points. 

If this was a $1,000,000+ Loan amount, then I can see this happening easily. Most lenders are going to require a personal guarantee from a member that owns a minimum of 21% of the actual borrowing entity. Most lenders will cap it to 4 members on the OA. If it's layered, they will want to trace the warm body guarantor. 

As for the soft credit check, I have only seen Kiavi and ROC capital offer this. But they also have restrictions when it comes to layered entities and the PG requirement. Although they don't disclose mortgages on credit, if you are planning to apply for a conventional mortgage, it will be very easy for an underwriter to see your Schedule Es and then ask for a property profile and see there is a mortgage recorded. They will definitely condition for the liability and it will impact your DTI, since there is a PG requirement on these loans.