All Forum Posts by: Ravi Punn

Great discussion here — you’re definitely not alone, Daniel. A lot of self-employed investors hit the same wall with traditional banks when write-offs lower their taxable income.

What’s nice about DSCR loans is how they look purely at rental income vs. mortgage payment, not your tax returns. If the property rents comfortably cover the proposed payment (usually a 1.0–1.25 coverage ratio), you can qualify for a cash-out refinance even when personal income looks low.

You’ll find programs that go up to 80% LTV on cash-outs, no tax returns, and flexible prepay structures — ideal for paying off private or hard money lenders.

Each lender calculates DSCR a bit differently, so comparing how they treat taxes, insurance, and short-term rental income can make a big difference in loan size.

Happy to share what that math looks like if you want an example.

Hi Joseph, The roadblock you’re hitting is tied to how lenders treat rural properties. When an appraiser tags the neighborhood as Rural, lenders automatically cap leverage lower than they would in a suburban or metro area. That’s why other lenders are pushing back. It’s not that the property isn’t strong — being paid off and generating income are both positives — but rural markets come with a leverage ceiling: • Around 70% max for purchases or rate-term refis • Around 65% max for cash-out refis So when you hear “65 on rural,” that’s what it means. The program, rates, and structures stay the same, but the maximum loan-to-value adjusts. We can absolutely help you at 65% LTV if you’re looking to pull cash out. Knowing that ceiling upfront helps avoid wasted time and lets you move forward confidently.

Alex, here’s a side-by-side breakdown of the three main paths you’re weighing:

Option	Structure	Monthly Cost Example*	When It Works Best	Trade-Offs
Cash-Out Refi @ 6% Fixed	$150K loan, 30-yr amortizing	~$900/mo (P&I)	Lock in predictable debt, scale now with a lump sum	Cash flow dip on current rental; if tenants buy soon, you’ve put long-term debt on a property you won’t keep
HELOC / Line of Credit @ 8% IO	$150K full draw = $1,000/mo, $50K draw = $333/mo	Flexible: pay only on what you use	Short horizon (tenants likely to buy soon); need capital fast for next deal	Variable rate risk; banks can reduce or freeze lines
Hybrid: HELOC + DSCR Loan	$50K HELOC down = $333/mo; $150K DSCR loan = $900/mo	Total = ~$1,233/mo	Scale into 2 properties: use HELOC as down payment, DSCR finances new rental	Slightly higher combined debt load, but DSCR only qualifies if new property cash flows, so growth is protected

*Based on a $200K property value, $150K loan (75% LTV).

Key Philosophy:

• Cash-out refi = certainty.
• HELOC = flexibility.
• HELOC + DSCR = growth.

That way you’re not just pulling equity — you’re turning it into more doors, which is the whole point of scaling.

Rereloluwa, you’re asking all the right questions — let me break this down from both an investor and lending standpoint.

Utilities & One Meter
When you see a single meter in an older multifamily, assume you’ll be responsible for at least some of the bill. Landlords in Ohio often budget $200–250/month to be safe. If the leases state tenants cover utilities, make sure you get estoppels signed to confirm. Otherwise, a ratio utility billing system (RUBS) can spread costs fairly across units.

Financing Strategy
A DSCR loan is designed for situations exactly like this — qualification is based on the property's income, not your W-2. Programs generally offer up to 80% loan-to-value, 30-year fixed or interest-only options, and require a minimum credit score in the mid-600s. The one caveat is the prepayment penalty. If you believe rates will fall and you'd like to refinance inside 18–24 months, make sure you select the right structure — for example, a shorter step-down schedule (like 1 year at 1%) versus a full 3-2-1.
Conventional or local portfolio financing could be cheaper if you qualify personally, but DSCR gives flexibility and speed without relying on tax returns.

Deal Evaluation
At $195K, you’re buying at roughly $50K per unit. For Tallmadge, with decent schools and stronger tenant demand than some Akron pockets, that’s very attractive. If stabilized rent is ~$3,100/month, your cap rate pencils in around 7% even after accounting for taxes, insurance, utilities, and a maintenance reserve. That’s healthy cash flow for a B-class market.

Rent Potential
The $1,100–$1,200 projection for the 2-bedroom looks reasonable, provided it’s in good shape and not undersized. Studios and 1-bedrooms typically turn faster, so build in a little higher vacancy assumption there.

Neighborhood & Exit
Tallmadge is more of a steady cash-flow market than a high-appreciation play. Most investors hold for cash flow, then refinance once stabilized. With 1.5 acres, you’ve also got long-term optionality — think garages, storage units, or even additional units depending on zoning.

Hidden Costs in a 1940s Build
The key things to investigate are plumbing (galvanized and cast iron often need replacement), electrical (knob-and-tube or outdated panels), and whether the “new roofs” were full tear-offs or just overlays. These items can swing your capex significantly.

Bottom line: Even being conservative, this looks like a solid buy. The financing piece is about matching your short-term rate outlook with the right prepayment structure. If you’re comfortable with the age of the property and the utility setup, this one checks a lot of boxes.

Hey Sandra,

Thanks for laying everything out—super helpful. You’ve done a great job positioning the property: strong equity, solid cash flow, and a great rent-to-cost ratio.

Here’s a quick breakdown of your options and how we typically look at it at Easy Street:

Option 1: Cash-Out Refinance

• If you go this route with a traditional lender, you might get a lower rate than your 9% HELOC.
• But conventional lenders often cap cash-outs at 75% LTV and may give pushback depending on how long you've held the property or if it's in an LLC.
• Also, full income verification and stricter underwriting apply.

Option 2: DSCR Loan

• This could be a great fit if the property is a long-term rental.
• A DSCR (Debt Service Coverage Ratio) loan is based on the property's rental income—not your personal income or tax returns.
• We offer 30-year fixed DSCR loans, and I’ve closed some recently at rates as low as 7%, depending on credit and leverage.
• You'd need at least a 1.0–1.25 DSCR (you're at about 1.57, which is strong), so you'd qualify easily.
• Option 3: Pay Down the HELOC

• Only makes sense if you're sitting on cash and want to reduce monthly payments or prepare to refinance later.
• But with $500/month cash flow, the property’s working well for you already.
• If you pay it off, you lock up capital that could otherwise go toward growing your portfolio.

🔎 My Take:

If you're not planning to sell or move personal assets into the property, I’d recommend refinancing into a DSCR loan:

• Lock in a fixed 30-year term
• Potentially lower your interest rate from 9%
• Free up your HELOC for the next deal!

Let me know if you want to explore numbers or check how much cash-out you can pull—I’d be happy to run the scenario with you.

Hey Jake,

You’re not alone—financing ADUs on lots with older manufactured homes is a challenge with traditional lenders. But there are other options beyond hard money, especially if you’re open to private lending solutions like what we offer at Easy Street Capital.

One route that could work well depending on your plan is a DSCR loan—short for Debt Service Coverage Ratio loan. These are long-term, 30-year fixed loans designed for rental properties, and they're based on the property's cash flow—not your personal income or DTI. As long as the projected rent from the ADU covers the monthly payment (typically 1.0–1.25x), you can qualify.

We've recently done DSCR deals with rates as low as 7%, depending on factors like credit score, leverage, and property type. For investors or homeowners building to rent, it’s a great alternative to conventional financing—especially when traditional banks decline due to asset type or age.

If your goal is to rent out the ADU, we could structure it as:

1. A short-term bridge loan during construction
2. Then refi into a 30-year DSCR loan once it's complete and rented

This way you get both the construction funding and a permanent loan without going through a full doc conventional process.

Happy to run the numbers if you'd like to see what leverage or rate options might look like. Just let me know!

Great breakdown here—always good to see transparency in pricing expectations. I’ve seen a range across the board, but lately many of the DSCR deals I’ve helped facilitate have landed right around 7% with origination fees often below 0.50%. 75-80% LTV. That’s not every deal, of course—credit, DSCR strength, and leverage all play a role—but we’re consistently able to stay in that 7.00–7.50% range with reasonable structures.

Prepay flexibility is another important lever most borrowers don’t fully factor into the total cost of capital, especially when planning to refinance inside 24 months.

I work on the origination side for a national private lender focused on investment property loans—happy to swap notes anytime or dive into a scenario if it’s helpful.

I’ve worked with a few folks in similar situations—refinancing an out-of-state rental can feel like a dead end when traditional lenders pass, but it’s definitely doable. We’re a direct lender, not a broker, so there’s typically a bit of savings on fees, and we do DSCR loans based on the property’s rental income (not your W2s or tax returns). You can close in your personal name or an LLC, whichever works best. Rental income can qualify as long term or we can use daily rates on historical data via AirDNA

Rates usually start around 7%, depending on the deal profile. Happy to run a quick scenario or just hop on a 10-minute call to walk you through a few ways you could structure it—even if you don’t use us. Sometimes it just helps to know what’s possible.

—Ravi

Easy Street Capital | DSCR, Bridge, and STR Lending

@Jay Hinrichs 

You all bring up critical points — especially around BRRRR investing from a distance.

In the last few years, I’ve watched countless investors buy C/D-class rentals in unfamiliar markets, driven by spreadsheets, hype, and influencer optimism — but without any meaningful understanding of local dynamics, property management risk, or long-term capex exposure. They were chasing yield, not building stability.

The truth is, most of those deals only “worked” on paper — assuming perfect rent, zero vacancy, and no curveballs. But real estate doesn’t play out in spreadsheets. Roofs collapse, tenants skip, management underperforms, taxes spike. The margin for error in these ultra-leveraged, low-equity plays is razor thin — and we’re now seeing what happens when reality sets in.

I’m not anti-BRRRR. I just think too many people approached it like a shortcut to wealth instead of a strategy that requires discipline, reserves, and local knowledge. Paper equity means very little if you can’t exit without writing a check.

We’re entering a market that rewards patience and punishes overreach. And that’s not a bad thing — it’s just a return to fundamentals

@Jeff S. 

Couldn’t agree more, Jeff.

The fallout we’re seeing now isn’t just about rising rates — it’s the result of years of pushing capital into deals without real underwriting discipline. When access to money was easy, a lot of lenders prioritized volume over viability. That’s catching up to the market now.

What’s overlooked is how few players were asking the right questions:

• What’s the actual scope of the rehab?
• Has the operator managed a budget of this size before?
• Are the comps real, or just hopeful?

I’ve seen plenty of projects overleveraged from day one — not because the market turned, but because no one challenged the assumptions.

As things tighten, the lenders and investors who survive will be the ones who treat this like a business, not a trade. Relationships matter. Diligence matters. And long-term capital is going to start pricing risk like it actually exists again.

Appreciate your transparency — it’s refreshing.