I think one good thing to remember is how the math works for Conventional and FHA loans vs Investor Loans Like DSCR and Bridge/Flip/Construction. Although Fannie/Freddie allows you to get to 10 loans, few people, including myself, are able to do that based in how cash flow is calculated.
With Fannie, Freddie, and FHA, Debt-to-Income (DTI) ratios are used. That formula takes into account ALL of your debts...mortgage, insurance, taxes, hoa, car payments, student loans, credit cards, etc. Investor Based Loans like the envogue DSCR loan only look at the cash flow of the property. Here's what I mean:
In a DTI scenario with Fannie/Freddie/FHA, let's say you make $1000/mo. I know that's a silly number, but the math is easy to do in my head. Guidelines state that you can have a 43% DTI (50% for FHA), but it actually goes a bit higher in reality. 43% of $1000 is $430, so for every $1000 in income you have, Fannie says you can have $430 in debts going out. Follow me so far? So let's say your current debts are $430 for your $1000 income for a 43% DTI. Now let's say you find a positively cash flowing rental property that gives you an extra positive cash flow of $200 (rents of $1000 with mortgage, insurance, taxes, and hoa payments of only $800). If you use DTI to calculate that and we add your current and new debts and income together, your income is now $2000/mo ($1000 old vs new rents of $1000) and your debts are now $1230 ($430 old plus the new payment of $800). DTI = Debts / Income = $1230 / $2000 = 61.5% DTI...you no longer qualify with Conventional or FHA.
Conversely, DSCR uses only the property cash flow and ignores your other debts. As long as the property cash flows, you have a decent credit score, and you have at least 20%-25% down (I know...a couple of programs have only 15% down at a higher rate), then you can do that deal. DSCR (Debt Service Coverage Ratio) is the inverse of DTI. DSCR = Rental Income / Principal + Interest + Taxes + Insurance + HOA Payments. It ingores other debts. It allows a real estate investor to scale beyond what they can get with Conventional/FHA because it cash flows you/your deal differently.
Bridge/Fix-n-Flip/Ground-Up Construction are nearly identical loans in that they are very short-term (12-18 months max) with higher rates and no prepayment penalties that allow you to take a run down property and turn it into something you can take to market...or convert to a longer term hold loan. They really only look at the viability of the deal itself only taking into account your credit score and money that you're injecting into the deal. They are temporary loans to get you to Conventional/FHA, DSCR/Rental Loans, or to sell it as a flip.
The advantage of Conventional/FHA over DSCR is that the rates and fees tend to be a bit lower. The disadvantage is that you can't scale with it. You can also close in your LLC's name with DSCR where you can't with Conventional/FHA. My advice, if you're OK with the loans in your own name, do Conventional/FHA for the first deal or two until you hit your head against the DTI ceiling, then switch to DSCR or a similar style loan to scale upward. I hope this helps you out a bit.
