DSCR Borrowers: Do You Underwrite to Current Rent or Market Rent?

Question

Some lenders use in-place rent, others allow market rent via appraisal. Which approach has made or broken deals for you?

Kiernan LaFaver · Answer

if there is a tenant in place, should always underwrite your own deals based on current rent regardless of lender policy. This allows for stress testing and seeing if numbers will work when conditions aren't optimal. If its vacant, lenders will typically use market rents as you pointed out. Of the two, current rent in my opinion is more ideal because it gives a better real world scenario and doesn't rely on hoping to get market rent. Market rent is just a cherry on top