All Forum Posts by: Kristen L Garner

Hi Malik, I agree with Payton... I would look at holding the better located property (given your optimism on appreciation) and selling the one with weaker fundamentals. That way, you reduce risk and still keep a foot in the market.

If you need someone to run the refi numbers just let me know.  It may help you to make your final decision. Best of luck! 

If it is the same line of work and the new gym position is W2, you can use that income now. The lower DTI could indeed improve your rate. You may be asked to provide an offer letter and/or your first month paystub. I'd be happy to go through the different guidelines for different loan programs with you if you'd like. Best of luck!

Different lenders have different product offerings and specialties. I would recommend interviewing a few and picking one that fits your financing needs and goals. Sticking with the same lender over a long period of time does benefit you because they are familiar with your financials, have your documents saved, and will keep an eye out for new products or guidelines changes that affect your personal portfolio and goals.

Best of luck! 

It’s actually pretty common for your insurance premium to increase when converting a primary residence to a rental. Insurers see tenant-occupied properties as higher risk due to factors like increased liability and less frequent maintenance. That said, a doubling of the premium does feel steep, so it’s definitely worth shopping around.

I’d recommend checking with carriers that specialize in landlord or dwelling fire policies like Steadily, Hippo, Foremost, or even State Farm if they write in your area. Also worth contacting an independent insurance broker who can shop across multiple companies for you.

You could also ask your current carrier to go over the policy for you and look for ways to trim cost.  On one of my properties I did this and learned that my replacement cost was way to high.  We lowered it and trimmed $400/year from the policy. 

Best of luck! 

From a lending perspective, your numbers look reasonable. At 75% LTV on a $140k appraisal, your estimated loan amount would be around $105k. After paying off the $71,500 balance and accounting for closing costs, pulling out ~$25k in cash sounds realistic.

Is there a prepayment penalty on your refi loan?

That said, your concern about reduced cash flow is valid. The 7.15% interest rate is higher than what you may have seen in recent years, but that's not uncommon in today's market for cash-out refis, especially with investment properties. If you're still cash flowing a few hundred dollars post-refi, you're in a decent position, especially if the cash-out helps you acquire another income-producing property via a DSCR loan.

Ultimately, the decision comes down to your investment goals. If you're comfortable trading a bit of cash flow now for the ability to scale your portfolio, and the DSCR on the new property still works, this could be a smart move.

Best of luck! 

Hi Tammy, I have a few different lending options for this scenario.  If you'd like to reach out I can give you more information. 

Hi Rob! I specialize in DSCR and would be happy to discuss with you.

Selecting the right lender is important - you need them to get your loan to the finish line and get you the best terms possible. DSCR requirements do have general similarities but below are some specifics to consider to make sure the lender you select has guidelines that will work for you.

Minimum and maximum DSCR ratio requirements: Generally you want to hit 1 or higher. But some DSCR lenders allow no ratio requirement or give a rate improvement if you exceed 1.25.

Down payment and reserve requirements: Most DSCR loans will require 20% down payment and 6 months reserves. But again, this varies.

Prepayment penalties: Different DSCR loans have different prepayment penalty options and structures. If you have a prepayment penalty you will want to make sure you understand the details of it. Ex: Can you make extra principal payments without triggering it?

Multi-family guidelines: Most DSCR loans are good for 1-4 unit properties. Others allow up to 10 units.

Feel free to reach out if you’d like to discuss further or run some numbers! 

Hi Haniyf, There are DSCR products with guidelines that will accept credit 640 or higher however you will get a hit on max LTV, capping you in the 60-65% range. If you have a partner with higher credit, you can move the property into an LLC with that partner. There are DSCR products that let you use the higher of the LLC member's credit scores. To get max LTV on the cash out, ideally, that partner would have 720+ score.

Hi Brandon, A rehab loan would be a good fit for this scenario. There are many options available but generally speaking they are short term 12-24 month interest only loans. The loan covers 85-90% of the purchase price and 100% of the rehab. Your rehab funds are held back and you take out draws as needed. Once the rehab is done you can refinance into a long term loan or sell. Let me know if you have any questions or would like me to run the numbers on a scenario so you can see what a rehab loan would look like.

Yes, you can purchase a vacant property using a DSCR loan. The lender will go off of the 1007 page in the appraisal for the rental amount to calculate the DSCR ratio. The 1007 page is similar to the page where they calculate the value of the property, but instead they pull comps and data for rental amounts from similar properties in your area. Most lenders will go up to 80% LTV for a DSCR purchase. Some even go up to 85% but the qualifying guidelines are stricter.

As far as the DSCR ratio you will want to hit 1+ to get the max LTV. If you go under 1 you can still get the deal done but you will likely get a hit in LTV or rate. And if your ratio is above 1.25+ you will likely get a better rate. Best of luck and if you want help running some numbers or seeing what rental comps are in your area, let me know!