DSCR loan With no prepayment penalty

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DSCR loan With no prepayment penalty

Zach Proto
San Jose, CA · Member since 2014 · 4 posts · 5 votes

Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you

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Zach Edelman
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
2y

I would highly recommend looking at the BP's list of recommended DSCR lenders and see which of these specializes/has a forte in STRs. STR lending with DSCR is a bit nuanced (i.e need to see who can underwrite with AirDNA, if the lender can underwrite with AirDNA are there any contingencies, etc.)

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  • Stephanie Walker
    Realtor · Charlotte, NC · Member since 2023 · 245 posts · 231 votes
    3y

    I've yet to find a DSCR lender that do less than 80% or 75% LTV. However, @Jon Puente is who you want to call for DSCR! If a product out there exists that fits what you’re looking for, he likely has it. 

    1Reply
  • Wilson Vanhook
    Rental Property Investor · Oklahoma City · Member since 2021 · 108 posts · 103 votes
    3y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


     The One Brokerage can do 15% down. Fees, prepayment, and interest rates will be higher though.

    0Reply
  • Jason Taken
    Lender · Chicago, IL · Member since 2021 · 424 posts · 145 votes
    3y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


     You'll always have to buy out the prepay or will just have a higher interest rate where the prepays are outlawed.

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    I would be interested to see if lenders will do DSCR loans on a condotel.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    All offer no pre payment penalties, in return you pay tons of points. 

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    What about a portfolio loan that would cover all these with one loan? Check smaller local banks.

    1Reply
  • Brooklyn McCarty
    Investor · Member since 2022 · 1k+ posts · 754 votes
    3y

    I would reach out to The Mortgage Shop, they specialize in all STR lending.

    0Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    You may check local commercial bank products. But most will also have a prepayment of some sort. Inquire about break funding if you find a good lender and what their policy is around deployment of funds based on spread. 

    1Reply
  • David Bilandzija
    Lender · Venice, CA · Member since 2021 · 189 posts · 132 votes
    3y

    @Zach Proto Full disclosure, I broker these types of loans. Your requirements are doable. I'd recommend working with a mortgage broker who has a focus on DSCR/investment property loans. Build a relationship with someone you trust and let them present you with options best suited to your goals. Best of luck!

    0Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    3y

    I agree with Leslie I’d be calling local banks for this. 

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  • Lyndsay Zwirlein
    Lender · Member since 2020 · 331 posts · 209 votes
    3y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


    A lot of DSCR lenders have programs for condotels. From my experience most condos are at 80% LTV but a condotel is typically 75% LTV (on purchases). Like others have mentioned, you can always buy the PPP down but it will typically be via a higher rate.

    0Reply
  • Myrtle Mike ThompsonBusiness Member
    Realtor · Myrtle Beach, SC · Member since 2016 · 350 posts · 204 votes
    3y

    @Zach Proto as a few others have suggested, I would check locally with the smaller banks and credit unions. I have a couple lending partners here in Myrtle Beach that offer a portfolio loan option very similar to a DSCR and will do 80% LTV, no prepayment penalty. Good luck!

    [email protected]843-999-2301
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  • Dawson Rosenberg
    Investor · Member since 2023 · 37 posts · 1 vote
    3y

    yesssss!! I would love to share some ideal advice with you. please check your private messages buddy!

    1Reply
  • Zach Proto
    OP
    San Jose, CA · Member since 2014 · 4 posts · 5 votes
    3y

    Thank you everyone for the help!  

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


     Hey Zach, 

    There are plenty of lenders that can do DSCR with no prepayment penalties at no additional cost.

    [email protected]818-269-7983
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    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    3y
    Quote from @Michael Baum:

    I would be interested to see if lenders will do DSCR loans on a condotel.


    Very few do, but most condotels are a non starter for DSCR brokers/lenders

    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y
    Quote from @Stephanie P.:
    Quote from @Michael Baum:

    I would be interested to see if lenders will do DSCR loans on a condotel.


    Very few do, but most condotels are a non starter for DSCR brokers/lenders

    That is what I figured. Seems like cash is the best way to buy one of these, but I don't see them being a decent investment for the long term. Thanks @Stephanie P.!

    1Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    3y
    Quote from @Michael Baum:
    Quote from @Stephanie P.:
    Quote from @Michael Baum:

    I would be interested to see if lenders will do DSCR loans on a condotel.


    Very few do, but most condotels are a non starter for DSCR brokers/lenders

    That is what I figured. Seems like cash is the best way to buy one of these, but I don't see them being a decent investment for the long term. Thanks !

     I don't have an outlet for condotels, but it seems @Erik Estrada and @Lyndsay Zwirlein may be able to do something with it.

    1Reply
  • Ari Ferguson
    Investor · Littleton, CO · Member since 2015 · 16 posts · 4 votes
    2y

    @Erik Estrada

    Who are these lenders and are their points higher to obtain the loan because of this?

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    I would highly recommend looking at the BP's list of recommended DSCR lenders and see which of these specializes/has a forte in STRs. STR lending with DSCR is a bit nuanced (i.e need to see who can underwrite with AirDNA, if the lender can underwrite with AirDNA are there any contingencies, etc.)

    11Reply
  • Austin ClarenceBusiness Member
    Lender · Phoenix, AZ · Member since 2023 · 135 posts · 31 votes
    2y
    Quote from @Ari Ferguson:

    @Erik Estrada

    Who are these lenders and are their points higher to obtain the loan because of this?


    Hi Ari, there are about 5 lenders I am aware of that do not have prepayment penalties. A loan program that has a 5 year prepayment (Which is usually the max) will almost always have better pricing than a loan with no prepayment. However, DSCR pricing can vary heavily from lender to lender. Please let me know if you have any questions

    [email protected]650-906-2376
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    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Ari Ferguson:

    @Erik Estrada

    Who are these lenders and are their points higher to obtain the loan because of this?


     The rate will be higher with no PPP, or you can buy it out with 1.5pts and keep the same rate. 

    Just Pm'd

    [email protected]818-269-7983
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    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Michael Baum:

    I would be interested to see if lenders will do DSCR loans on a condotel.


    I do have Californian DSCR lender/broker for my condotel.....

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


     One thing you can do also, you could check the owner of the condotel in your complex one by one and then check the deed record, who is the lender, and then you contact them one by one ......that way you know for sure the same lender/broker has alrady working experience in your complex.

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    2y
    Quote from @Zach Proto:

    Hi looking to get DSCR loan for a few of my STR properties. They are condotels. Any recommendations? Any places that do not have prepayment penalties or have lower LTV requirements? Thank you


    Find an experienced DSCR broker with lots of different lending outlets who can compare all of the terms and rates for you.

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
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    0Reply
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