How Accurate Do Rent Projections Need to Be for DSCR?

Question

For those using DSCR:

How tight are your rent estimates vs actual performance?

Are you seeing deals fall apart over small gaps?

Kenneth Garrett · Answer

@Linda Murray

I always put a tenant with a lease in the building/unit before I refinance. It takes away the guessing of the rent allocation.

Scott Alfano · Answer

The appraisal will give a rent estimate. Most of our banks will go up to 125% higher than the appraised rent if there's a lease already in place at that amount. Since it's not always required for leases to be in place prior to closing, something like getting the home leased for $100 lower than expected and DSCR goes under 1.0 doesn't happen too often.

How Accurate Do Rent Projections Need to Be for DSCR?

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