All Forum Posts by: Brandon Beardt

 Hi Karthik,

There are tons of DSCR lenders here on BP that can help you out. Do some research on a few, read reviews, and see what they have to offer. As Erik mentioned, working with an investor focused broker will help you find different loan products that best fit your situation/scenario. I would even advise to shop around and see what options different brokers can get you, as different brokers work with different lenders whom have different guidelines, requirements, and pricing.

To answer you second question, one con that comes to mind are prepayment penalties. I'd say a standard prepayment penalty for DSCR is a 5 year declining penalty, however, there are many options to bring that down lower (with either an increase to rate or fee paid at closing) and some lenders even start their prepay penalty at 3 years.

Most if not all DSCR lenders will be able to offer your client 30 year fixed options for the DSCR product. Each individual lender will have their own set of guidelines/requirements and pricing adjustment. Read reviews of lenders from different sources and you'll get a better idea of how they operate. If your client's goal is to expand and purchase more properties, I'd advise working with a mortgage broker with access to various investor loan products. That way, they can find a loan product with the best fit for your clients needs. A knowledgeable mortgage broker with access to a multitude of loan products will be able to help your clients scale much faster.

Hi Emily,

I'm not aware of any lenders that would be willing to refinance a property based on the appraised value immediately after a cash closing paying under market value. It's way too risky from the lender's perspective. You'll more than likely have to wait the 3 month title seasoning period before being able to refinance and tap into some of that equity. Think about it this way, if you pay $25K cash for that property, is it reasonable that a lender would turn around and give you $75K (assuming 75% LTV and it appraised at $100K) the next day? If you're trying to tap into the equity before the 3 months of being on Title, your leverage will be based off the acquisition price plus any verifiable rehab.

For DSCR, the appraisal should come back "as-is" and not "subject-to" any sort of repairs. Pictures of the interior of the property should show that it is currently in habitable condition as well. Don't want to see any holes in the walls, mold, or broken windows, etc. The lender will also look at the 1007 report as it will indicate the appraiser's determination of the monthly market rent for the property. This will usually be the income variable used to determine the DSCR ratio. You'll just want to make sure the new projected monthly mortgage payment is greater than or equal to the market rent shown on the 1007. If it's less, you'll have to either submit a rebuttal with better rental comparables or lower your leverage to get the ratio back in line.

 Hi Robert,

Not sure why your lender wouldn't be able to loan on properties sub $125K, unless I'm misinterpreting your post. In my experience, that's never been an issue unless the properties themselves are worth sub $75K. Perhaps that lender just has more strict lending guidelines than most. My recommendation is finding a new lender or better yet, work with an experienced mortgage broker that specializes in investment property financing. They'll be able to review your scenario and strategize a loan solution that best fits your needs. Best of luck!

 Bobby,

What type of financing are you looking for with your expansion into Toledo? Properties sub $100K are usually no issue as long as the minimum loan amounts are met and they aren't rural. Best of luck in completing your team!

 Hi Tiffany,

You can get a full 75% LTV DSCR cash-out refinance based on the subject property's new appraised value once you've been on Title for 3 months. That way you don't have to wait the 6 months before being able to access that equity. I would just double check that you're not too overleveraged currently with the HMLs you have on the properties, especially since they're already renovated and you won't get the benefit of added sweat equity once the refinance comes. If you don't have enough equity in the property during the refinance process, you may have to switch to a rate/term refinance (assuming you won't be getting any cash-out) and potentially bring in some extra cash at closing to pay off the current HML. Best of luck!

 Hi Glory,

There are tons of DSCR lenders here on BP. Shop around and see what some lenders offer and their costs. Keep in mind, you'll get what you pay for in terms of service. The headache and delays may not be worth the risk of losing your EMD (or your hair) for the purchase transaction if the lender can't perform. Do the research and make sure anyone you're thinking about working with can get the job done. Best of luck!

 Hi Diane,

What type of financing are you looking for and what is your RE investing strategy? That can help differentiate the types of lenders that would be able to help you out. Best of luck!

 Hi Saika,

I don't know if ARV can ever come back too high on a refinance... I would think you'd want it as high as possible! Having the ARV come back higher is great in that it provides you with options. You can take out more equity than originally planned (if you can handle/qualify with the increased payment amount) or you can take out the amount of equity that was originally planned at a potentially lower rate (assuming there is a moderate drop in the LTV%). Higher ARV gives your more opportunities but lower ARV limits your possibilities.