DSCR Loan and Insurance Requirements

[Antonio Ward Jr]

Good Morning BP Fam, 

I am currently in the refinancing phase of my multifamily BRRRR project. We have a DSCR lender and we are moving toward closing but they are requiring for my insurance plan to hold 80% of a replacement cost estimator for my property even though it would not cost that high amount to replace the entire house in the event that such occurs. My lender is helping with trying to find a work around. In my area a landlord policy is very high, but based on what we are bringing into the property we would still be cash flowing a decent amount of income monthly after expenses. My lender is suggesting to get a homeowners insurance policy, close the DSCR in our personal name, and then the insurance agent they connected us with informed us a new product coming in April that will allow us to transition of insurance into our business name as well as deed the house back into the business name. I am here to gain some insight on this situation, so I can get an idea of what to be researching or doing moving forward.

[Owen Rosen]

Quote from @Antonio Ward Jr:

Good Morning BP Fam, 

I am currently in the refinancing phase of my multifamily BRRRR project. We have a DSCR lender and we are moving toward closing but they are requiring for my insurance plan to hold 80% of a replacement cost estimator for my property even though it would not cost that high amount to replace the entire house in the event that such occurs. My lender is helping with trying to find a work around. In my area a landlord policy is very high, but based on what we are bringing into the property we would still be cash flowing a decent amount of income monthly after expenses. My lender is suggesting to get a homeowners insurance policy, close the DSCR in our personal name, and then the insurance agent they connected us with informed us a new product coming in April that will allow us to transition of insurance into our business name as well as deed the house back into the business name. I am here to gain some insight on this situation, so I can get an idea of what to be researching or doing moving forward.

 Your lender should stick to lending.  They're not helping at all. Their solution makes no sense and won't solve the problem with the added bonus of committing insurance fraud.

You should look for a good insurance broker that might be able to help.