All Forum Posts by: Robin Simon
Robin Simon has started 636 posts and replied 3875 times.
Post: What is the future of DSCR??

- Lender
- Austin, TX
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I don't think we are headed toward consolidation or domination by big / well-capitalized players, in fact the opposite seems to be playing out. The ones who got crushed the most this past year (https://www.housingwire.com/ar...) (https://www.housingwire.com/ar...) were the big shops that were too busy building up massive pools and throwing money at scaling to notice the rapid transformation of the market and vertical rates - the smaller nimble shops with smaller balance sheets that were constantly in the secondary market were able to pivot much quicker.
For the same reason that Zillow, OpenDoor failed, at the end of the day residential housing is still an local market and an "exception-based" business, lots of factors make it easier for leaner shops to compete.
I also think when it comes to attracting talent, its hard to get people who are used to agency (QM) loans to expand and do DSCR - its a lot more work! It takes a much better talent / more determined originator to find deals and make them work, rather than answer phones and plug into the rules. It would in my view be very hard to run a shop that dominates with QM and DSCR. These QM firms have also made heavy investments in technology that frankly doesn't integrate well with a DSCR underwrite which is better underwritten like a CRE loan in my opinion, not worth this massive tech overhaul for the bigger players in my view.
Also - highly doubt GSEs will step in, conventional is still an option for investment properties, they are far more likely just to loosen uw or expand limits than create a true DSCR product competitor
Post: First deal overthinking all details - Points and Closing Costs

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- Austin, TX
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Quote from @Michael Litle:
I'm about to offer on my first deal, a duplex in a slightly expensive market but will cashflow fairly easily. I found a lender through BP who seems very knowledgeable, experienced, and likely someone I could grow but before I lock everything in, I can't help but wonder if I'm wasting valuable liquidity early on by paying $12k in closing ($7500 for 2 points). Should I be nitpicking closing costs?
The deal breakdown will be likely a $420k offer with 10% down @ ~6%. With Closing costs, mortgage is just over $2500 and rent for both sides is $3200 - $3500. Overall an excellent first deal I believe, but I'm already ready to find make my next offer so I don't want to chew up cash I might need on the next down payment.
Am I over analyzing while I'm trying to learn this process?
Don't have all the details obviously but I think you should pull the trigger and not stress too much on the closing costs, if you listen to a lot of the podcasts/stories of experienced and successful investors, the advice is almost 100% uniformly to just "jump right in" and get over the hump on the first property, the learning lessons and the push to get you out of the paralysis analysis phase seems to always be well worth it, way more than potentially leaving a few pennies on the table
Post: Do apartments and new construction impact STR viability?

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- Austin, TX
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Its dependent on market, but in a general sense, it would at the least have some negative impact on valuation (increased supply)
Post: Greetings and hello from H-Town!

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- Austin, TX
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Quote from @Jason Amaya:
New to the group and wanted to introduce myself. We are the go to contractors that manages and oversees all aspects of your projects. From move in ready homes to apartments and even commercial. We arrange and manage materials, workers, equipment and services needed for completing projects on time and within your budget. Everything from start to finish is done in house.
Looking to connect with investors, realtors, home owners, ANYONE. 😁
Let’s connect and most importantly LETS GROW!
Welcome, would love to connect, we are up in Austin but do a ton of deals helping flippers and BRRRR investors down in Houston, there are probably a lot of potential referrals and connects we could share.
Post: New Agent Looking to Connect

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- Austin, TX
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Quote from @Molly Francis:
Hi everyone! I'm a licensed real estate agent and have been working in investment real estate for a few months now. I've learned so much already and am so excited about this journey to grow even more! I'd love to get connected with other agents, investors, wholesalers, contractors, etc. so we can hopefully work together or even just bounce ideas off each other. I look forward to connecting with some of you! :)
Welcome - Houston is a great market to be involved in. We have a couple team members coming down from Austin this week, would be great to connect @Zach Edelman
Post: Can't find books on mortgages! Feeling uneducated.

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- Austin, TX
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Theres probably not enough to fill a full book on the different mortgage lending options for residential - you can probably get what you need from the resources here, on youtube or google searches. Probably best way would be to ask more specific questions on this forum or go ahead and talk directly with a mortgage broker or lender that can help walk you through. Its a bit complex at first, but you can get a pretty comprehensive "education" pretty quickly
Post: Non QM loan for manufactured home?

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- Austin, TX
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Quote from @Nick Beveridge:
Hello, it appraised at $395,000 recently for an FHA buyer. Engineering report done and past.
I'm looking for a Non qm product that will do a cash out on an manufactured home. It was tied to a foundation and converted to real property a long time ago.
Generally not going to be allowed by DSCR lenders - primarily because manufactured homes are typically not actually considered "real estate" since the home can be picked up and moved (and the lender won't have foreclosure recourse in this occasion). Its why most commercial real estate loans secured by manufactured housing is actually secured by the PADS not the buildings
Post: Question about DSCR

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- Austin, TX
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Quote from @Nelson Arevalo:
Quote from @Julian S.:
Hi everyone,
I am a house flipper hoping to segue into rental properties in the near future in hopes of earning cash flow. I have short term goals of house hacking a fourplex, and long term goals of owning larger apartment buildings.
My question is regarding debt service coverage ratio (DSCR). From what I've been reading about the types of loans I will be pursuing for multi family buildings, I should be looking for listings where the DSCR is 1.2 or greater. Am I missing something or are properties yielding such a ratio basically non-existent? Are such deals only attainable if you can rustle up a seller on your own and persuade them to sell at a discount?
Would the correct course of action be to purchase a value add property using a bridge loan, rehab, raise rents, and then find a proper loan with better terms?
I should mention that I have a nest egg of about 1.5m at my disposal. Does having a decent net worth afford me any flexibility from prospective lenders?
Thank you for any insight.
Recently DSCR (Debt Service Coverage Ratio) for residential properties has been the talk, you probably have seen most loan officers market the heck out of these in recent months! It's been a great alternative that some lenders have expanded their DSCR to 5 - 8 Apartment Units. Making it accessible for investors.
It has some of the same guidelines that DSCR for residential properties for 1-4 units, but it also has some similarities to a commercial transaction, one of them being a lower loan to value.
So what's the difference between a DSCR loan for 5 - 8 units and a Traditional Commercial Loan?
The main difference is the terms, DSCR terms are 15 and 30 years fixed and 30 and 40-year interest only options, there is more leniency as to Minimum Credit scores, Vacant units, and DSCR coverage.
Commercial loans are typically shorter terms with a balloon payment at the end of the term and are more strict regarding the cash flow and investor/owner finances/assets.
Nelson Arevalo
Important to also understand that DSCR is calculated significantly different in residential "non-QM DSCR Loans" and traditional commercial real estate loans
Residential DSCR = Rents / PITIA (Principal+Interest+Taxes+Insurance+HOA)
Commercial DSCR = NOI / Debt Service (Pirncipal + Interest)
Post: What is a DSCR Loan?

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- Austin, TX
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Quote from @Chris Webb:
I just spoke with a lender who does this and the highlights are .25-.5 above the going rate, 20% down with proof of DP funds, and prepayment penalty for 3 years.
DSCR loans are generally flexible in comparison, can run from no prepayment up to five years five percent, and can range quite a bit in rates and down payment amounts. I think .25-.5 above is pretty light, all things equal, probably more like 50-75 bps higher. But have a lot of other advantages vs. conventional or DTI-based non-QM such as:
-No DTI qualification (no income verification)
-Ability to borrower through an entity like an LLC with partners
-much less documentation than conventional
-much less size or concentration limits
Post: Mortgage Calculator Issues

- Lender
- Austin, TX
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Honestly if you are sweating and spending time thinking about 37 cents a month, this is not the right business for you IMO