🏡 OKC Rental Refi Review, Delayed Financing vs DSCR, Do These Terms Make Sense?

Question

Any loan officers in OK in this group that would be open to a quick second opinion? I received these numbers today and want to check in and confirm that this is making sense and that we're looking at this the right way.

The background:

Purchased a SFR home in OKC with cash last year for $115,000, then spent $35,000 in repairs, so I'm in it approximately $150,000.

Estimated ARV is $180,000-$190,000.

I have 2 conventional loans right now and plan to purchase 6-10 homes in OKC the next 1-2 years once I sell one of my homes in CA (moving me down to only 1 conventional loan) this summer. I am mindful of the conventional loan max, but I'm not overly concerned at this moment.

I am a realtor and flip homes in CA. While I'd prefer to go the easiest route for financing, I'm open to a full doc option if it makes more sense in the long run for getting a better rate.

My 6 months (for delayed financing option) is up on April 19 (which I guess would really be Fri April 17)

Rent is going to be $1,560/mo. Goal is to keep as a LTR. Proposed move in date is 4/1/26, but it's a section 8 tenant so we're going through the process right now with inspections.

My credit score is approximately 790-830 at the various bureaus.

Ideal goal is 12%+ COC return after factoring DP, repairs and 10% for property management and 10% for vacancy/capex. Taxes are $1,450/year. Insurance is $1,200/yr.

I appreciate flexibility to refi or sell without huge pre-payment penalties, but I'm open to having one if it makes sense with a ton of upside on the cash flow. I'm thinking that the loan amount is so low that it's a pretty minimal benefit to taking on the penalty.

I don't want to over leverage myself, so I'm thinking that a loan amount of around $120,000 is the best all things considered, but I'm open to a different perspective.

What I’m trying to understand:

Are these rates and points competitive right now?

How would you recommend structuring this (DSCR vs conventional)?

Know of any OK lenders offering better delayed financing terms?

Does 2.5 points make sense at this loan size?

Open to connecting if you see a better structure or have helpful insight.

Tanya Brewer · Answer

Broker here. On a file like this, conventional delayed financing is the play. You've got the credit, you can full-doc, and you're only at two conventional loans right now. DSCR on a $120k loan is where things get expensive fast because you're bumping up against minimum loan amounts at most non-QM shops and the low balance adjustments eat into pricing. Two and a half points on a DSCR at this size isn't unusual, that's actually about what I'd expect, but on conventional you should be well under that.

Your April 19 seasoning date means conventional delayed financing lets you pull back up to your original cost basis, so you'd be looking at getting most of that $150k back depending on the LTV. Once you hit 12 months from purchase you can do a standard cash-out refi at full appraised value if you want to capture the $180-190k ARV and pull more out later.

Rate-wise, conventional investment property is running in the mid to high 6s right now for strong credit files. With your scores you should be on the better end of that. DSCR on the same deal would land somewhere in the mid 7s at best, probably higher with the low balance hit. More in rate, more in points, less flexibility. If you're planning 6-10 more buys in the next couple years and you've got conventional slots open, save the DSCR for when you've used them up.

One thing to keep an eye on, make sure whoever is quoting you can close before your conventional slot situation gets complicated. Selling the CA property frees one up but the timing matters for how underwriting counts your financed properties at application.

AJ Exner · Answer

Kara,

I'm looking over what you've got and finding a lender that will lend below 100k with rates between 6.8%-7% with only 2.5 points and no PPP is crazy, and my concern is that one of those things isn't actually what is happening. Obviously depending on when you bought it, that seasoning element is going to be a big one, especially as you start to scale.

I'm always open to both, but obviously a part of the draw is keeping your FICO in that upper tier while keeping properties properly aligned in the proper leverage/structure to keep scaling. I would say that they are about right, but I would be interested to know a little more behind the quotes themselves (buy-down vs. seasoning vs. credit inquiries).

Would love to connect and help if it would be helpful.

Good luck!

Stacy Raskin · Answer

Generally if you're looking to use the new appraised value, a DSCR loan will give you a shorter seasoning window or waiting time between transactions. For conventional, that is generally a year. For DSCR, it's shorter and depends on the lender or mortgage broker you're working wth. This helps you to get your cash back more quickly.

If you work with a mortgage broker that works with wholesale lenders you will get more options that have more investor friendly terms such as better rates and program guidelines. Wholesale lenders are generally not advertising directly to the public.

Conventional loans require more paperwork and DTI income ratios so if you're ok to do the extra paperwork and know you will be approved based on your DTI ratio that can work.

A rate is just floating or not confirmed unless locked.

Also, DSCR loans aren't regulated the same way as conventional so important to work with a mortgage broker or lender you have done research on as DSCR loan terms can be changed all the way up to closing and some lenders will change them because they can.

🏡 OKC Rental Refi Review, Delayed Financing vs DSCR, Do These Terms Make Sense?

The background:

4 Replies