All Forum Posts by: Calvin Quallis

The only potential concern is the arv 65-70%; however, because your exit strategy is the DSCR that seems approachable. Have you approached your original lender about DSCR after the rehab is complete?

@Calvin Quallis

It sounds like you're more than qualified to tackle the project.  What do you currently owe on the property?

Have you had an updated appraisal completed?

Mid Renovation refi's can be cumbersome to get done.

What is your timeline like to complete? Will you be done by Memorial Day?

Lot's of things to unpack.

 I thought I had seen this scenario before.  https://www.biggerpockets.com/...

You should have taken a hard money up front instead of the DSCR loan if you were going to do the renovation (like I said in May).

Now you should go back to the beginning and get a hard money loan that includes the renovation funds, complete the renovation and then get a DSCR take out loan if you can. If you can't, you sell. The good thing about his is you will have seasoned title so it shouldn't be too hard to get DSCR financing with Air DNA data although, as I also mentioned in May, loan size is going to get a HUGE factor on this one as many lenders have contracted and reduced their max loan size.

Stephanie

We can look at this for you.  You'll have to refinance your 1st lien debt along with securing the $500k or so left.  If you are good with that, reach out and we'll see what we can do.

how did you get a DSCR loan with $600k needed in repairs? DSCR loans generally (always?) require properties are turnkey and don't require repairs

Is your intention to use this as a STR? Can you finance the renovations with the DSCR loan? If not, what is the game plan to finance the construction?

There are DSCR products that allow for refinance without seasoning if renovation was conducted. However, I'm only familiar with funding the renovation with a value-add loan then refinancing (in this case up to 80% without seasoning). If you're planning to use it as a STR, NOI would be calculated with project income from a site like AirDNA. Feel free to reach out if you have any questions.

@Calvin Quallis

A couple of things. The reason to do a hard money loan on this is to keep your cash in your pocket. The hard money will fund the renovation. if you do a DSCR loan, you won't get renovation money and you'll come out of pocket with the reno funds. You can use comparable rentals for the appraisal and monthly leases with every DSCR lender I know, but that's on a purchase. On a refinance, the property has to be stabilized or you'll get a reduction in LTV. If refinancing, 6 months is your bare minimum on this one. Your loan amount is going to be too high for many to consider this loan on a DSCR product. Even Deephaven, which is the lender to the lenders and has some of the highest loan amounts on DSCR has a max loan amount of $2,000,000 and a max cash out amount of $500,000. If you're going to use short term rentals for a property like this, you'll need to see comparables that are also using STR's and some AirDNA data.

This is not a slam dunk loan.

Stephanie

@Calvin Quallis - If you need financing for the initial purchase and rehab (not using your own cash) then a short term hard money rehab/bridge loan is what you'll need.  A long term dscr rental loan won't work.  The lender won't do that type of loan on a property you plan to rehab.  You do the rehab first, then do a long term take out loan once the rehab is done and you have cashflow (or soon will).  You need a good broker to find loan programs for you.

DSCR should be immune to that seasoning period, or else it's just a regular conventional seasoning period. They usually do a rental analysis and if that comes back 1:1 then you qualify.