All Forum Posts by: Matthew D'Angelo

I have heard a lot about DSCR loans, which sound promising for several reasons (feel free to give your opinion if you think otherwise). However, I'm wondering how to manage the disconnect between the common >1.25 DSCR requirement and the investor's goal of acquiring properties with upside, meaning that it shouldn't start out with the best NOI at acquisition. Would a DSCR lender only look at what would be the current rent roll and expenses immediately after acquisition, or would the lender consider reasonable pro forma with upgrades/improved market rents?

Thanks for your input.

Hey Henry, in a nutshell - DSCR loans are self sufficient in that they will work as long as the rent and piti are 1:1. The rent that will be used is generally from the rent schedule on the appraisal. In some cases, there are "near dscr" programs to help investors secure a property but can't quite cash flow off the rip. 40YR 10YR I/O periods help in situations like this if it were a purchase you could qualify just off the i/o payment as far as the lender is concerned. However, your personal framework and numbers you generate on your investor p&l sheet don't really matter to uw. The bottom line with DSCR is as long as the monthly Piti is covered with the rental income, it's a green light. Good luck beast!

This is only the case for 2-4 unit multifamily. 5+ unit multifamily does a calculation of NOI/Annual Debt Service by looking at the rent roll, P&L's, and adjusting for capital expenditures and has a higher DSCR qualification ratio, such as the 1.25 mentioned in the original post. @Account Closed mentioned getting into a bridge program and then refinancing into long term debt once the rents are stabilized which can work as well.

1 Vote

Trying to obtain 90% LTV on an investment property today is going to be extremely difficult. Most lender's won't even go above 80% LTV.

1 Vote

If you need your rehab costs financed, you would need to get a bridge loan which is a temporary loan where you'd pay interest only while you hold the note. Since you're fresh, 70-80% of the purchase price would be funded and 100% of the rehab would be funded. Once you complete the renovations and occupy the residence with a tenant, you then refinance out of your temporary loan and into long term financing which can be a DSCR loan if you want.

2 Votes

Orlando, Florida

Your best bet is hard money if you're looking for a lender without seasoning requirements.

0 Votes

I don't know why this lender would offer you long term financing since you plan to fix and flip this. They should be offering you a bridge loan with 12-18 month terms with interest only payments.

1 Vote

Oklahoma City, Oklahoma

It sounds like he doesn't want to add her because in the event they break up and she is on the lease then it will become a situation for both of them. He for sure wants the ability to remove her from the property if they break up.

2 Votes

Quote from @Sergey A. Petrov:

That is weird. Who appealed to begin with? You or your lender? Maybe the lender saw an obvious mistake in the original appraisal (significant square footage discrepancy, wrong address, 7 bedrooms instead 2, a huge swimming pool in the backyard vs subject property being a studio on the third floor). We are all humans and appraisers make mistakes too. Do you think the actual value is closer to $350k or $200k?

When an appraisal is turned in to the lender, there is an appraisal review score that is given from 1 to 5 to determine if a review is needed or not. So the lender decided to review because they initially gave a score of I believe 1 or 2. Not sure what determines the score, but maybe the appraiser messed up with the comps.

0 Votes

All Forum Posts by: Matthew D'Angelo

Matthew D'Angelo has started 0 posts and replied 7 times.

Post: DSCR Calculation in Multifamily with Upside

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Post: DSCR to buy and renovate

Post: No Seasoning DSCR Options?

Post: How would you finance this deal?

Post: Boyfriend wants to sign lease himself, not to include girlfriend.

Post: Refinance appraisal reduced from $350k to $200k