All Forum Posts by: Jonathan Taylor

Saw this come up and its terrible to hear these stories. ANY lender in the DSCR 1-4 space that asks for an upfront fee is not common. The only cost that is normally charged BEFORE closing, is the appraisal but this should be paid directly to the appraisal management company not the lender.

I have read other accounts of lenders that have advertised on BP that request a 'loan fee deposit' or what not. DO NOT GO WITH THAT LENDER.

Sorry to hear you had to go through this.

@Crystal B. you're in a good position and to reiterate what @Dave Skow posted, you can always refinance out of a higher rate of today if the rates drop in the future. Just compare rates of today to three or four years ago. Wildly different. 

The main focus should be the 800k purchase. You date the rate but marry the property. Good location/schools/amenities will attract the right tenant when you plan to move out. If the market rents aren't supporting the market rents, then sell and take the profits to the next home. 

@Seth O. the main number that stands out is the renovation amount. Since the reno amount is about equal to the value of the property, my F/F lenders do not lend more than the as-is value on the property. So for your case, max reno would be 150k. 

Something to consider. 

Secondly, 70-75% Cash out is what I am seeing in this market. @Brittany Minocchi is correct that DSCR lending landscape changes frequently but based on those numbers, 425k ARV is a good range.

Happy to help on this if you have any further questions.

@Bailey Coleman I have lenders that have 90 days seasoning off of the new appraised value for fully occupied properties. This sounds like it fits so you'll have to wait at least 90 days. 

@Kyle Smith Im in agreement. 90% Cash out does not exist. With the rates where they are, most properties dont debt cover at 80% LTV. This may be the case to either leave cash in the deal or if you are unable to cover the payoff of the first mortgage, you may have to sell.

A lot of borrowers are in this position so ask yourself what is the amount you are willing to leave in the deal.

@Kyle C thomas lenders are becoming more strict on FICO scores so that is plausible but as stated above, DSCR would be a solid option if your credit can meet the minimums.

@Ben Habig I do DSCR loans in LLCs all day. Similar to @Jay Hurst , this would be a higher rate than conventional lending programs but its a keystone loan product for my investor clients. 

A DSCR loan, aka lite doc or business purpose loans, uses the rents you receive on the property and divided by the new loan PITI to receive a ratio. Simple math would be a PITI of 1,000 and rents of 1,500. That would be a debt service cover ratio of 1.5. Basically, this property cash flows. FICO, experience, and LTV are also factors but this is the basis of the loan. No need for tax returns, Verification of Employment, or income. I have been through this loan as an investor myself and originate these loans all the time.

@Wouter Erwee Based on what your posted, @Jay Hurst 's numbers are logical. The other issue I would see is if you are using a DSCR loan, you may not cash flow at $93,750 based on 1k in rents. Try conventional lending or a bank statement program as those utilize overall DTI and not DSCR for loan qualification.

Hope that helps

@John Morgan Thats a great option to save on the interest payments and loan costs, if you are looking to leverage then a F/F program comes in handy. 

@Joseph Turner the biggest pitfall is DTI. If you are using a local credit union or balance sheet lender they have additional qualification standards but I see you are in Oxnard. Im in LA and can help you with that when you are ready. DM'd you.