Avoid Leaving Money on the Table

[Jordon Young]

I am a small fish trying to grow in a bigish area and I need any edge i can get in this market to keep my bidding competitive. My first 2 properties I saved and put 25% down. Im currently purchasing my third property and looking to leave as little money in the deal as possible so I can purchase my next property a soon as possible. I know i can use hard money and get that paid back with a DSCR loan, but Hard Money for this deal will cost me about $15k. Is there any way for me to personally finance and still pull my money provided the DSCR ratio can stay above 1.2?

[J Castro]

Hi @Jordon Young, welcome to BP!
You're thinking in the right direction with trying to recycle capital and keep moving quickly, but the DSCR ratio alone won't let you bypass how the deal is funded on the front end.

Even with strong DSCR (1.2+), lenders still care about source of funds, seasoning, and how you actually got into the property before they'll allow any cash-out or refi. That's where most investors get tripped up when trying to avoid hard money costs.

If the goal is to reduce the $15K hit, you may want to look at alternatives like private money, portfolio lenders, or bridge products with lower fees instead of trying to structure around DSCR alone. Those tend to keep you more flexible without creating issues on the back end.

Bottom line — DSCR helps you exit the deal, but it doesn't solve the entry structure.