Anyone Using DSCR Loans to Transition from Flips to Rentals?

[Kelly Schroeder]

I've been talking with investors who started with flips but now want to hold rentals without hitting the wall of conventional financing. DSCR loans keep coming up as a tool for that.

For those who’ve made the shift:
- Did DSCR help you scale faster into buy-and-hold?
- Were the cash flow metrics tough to meet compared to traditional approvals?
- Any lessons from moving from short-term profit (flips) to long-term holds with DSCR?

I’d love to hear how you’re balancing flips and rentals while keeping momentum.

[Jay Hurst]

Quote from @Chris Seveney:

Quote from @Jay Hurst:

Quote from @Jaycee Greene:

Quote from @Kelly Schroeder:

I've been talking with investors who started with flips but now want to hold rentals without hitting the wall of conventional financing. DSCR loans keep coming up as a tool for that.

For those who’ve made the shift:
- Did DSCR help you scale faster into buy-and-hold?
- Were the cash flow metrics tough to meet compared to traditional approvals?
- Any lessons from moving from short-term profit (flips) to long-term holds with DSCR?

I’d love to hear how you’re balancing flips and rentals while keeping momentum.

 @Kelly Schroeder What is the "wall of conventional financing"?

 That was going to be my question as well!

 i assume they mean the 10 loan limit.

We see many people who are using DSCR as an avenue for growing. you typically need 25-30% down payment and dscr positive ratios, but the rates are not much higher than traditional loans right now and are a great avenue. the biggest delta is typically you are gonna have to have a 5 year PPP, you can get them with less but the rates will go up.

 sure, 10 properties, but I talk to folks all the time who have 2 or 3 rental properties who think they cannot qualify for conventional, and some have even spoken to a lender, but a LO that does not work with rental income often and just does not know how to calculate. 

The thought is that conventional loans require the DEBT to be counted but for some reason most assume the INCOME does not count. and of course it does count. And fannie just made a change making this even easier in that if a property was purchased in the middle of the previous year instead of using the tax return, you can use the lease.  So, now it alligns with what had been the case if you had bought a property in the same tax year.  This will help quite a bit qualifying even more folks.