All Forum Posts by: Stephanie P.

Hey Everyone! Looking to get some advice and guidance on DSCR (Debt service coverage ratio) lending. My goal is something along the lines of a house hack by purchasing a single family home with maybe 4 bedrooms and living in one and renting out the other 3 rooms to roommates. I am a recent college grad and have several friends looking for affordable rental options and see it as an opportunity to jump start my investing journey. Id want to have the mortgage and expenses covered by the rental income and hopefully a little cash flow as well. I have some cash for the down payment, but it looks like the down payment for these loans can be 20-30%. Im in the Atlanta market, which is pricey. And this will be my first home purchase. I like this loan for my situation because Im a realtor so I have inconsistent income and little credit history so it seems like a good option because they lend based on the income of the property.

Wanting to know if anyone has any experience with something like this? Or any recommendations for other options instead of or in addition to this type of loan to fund a deal like this? What ratio should I look for? Also, if I used a DSCR loan and took title to the property in an LLC, could I still use an FHA first time home buyer loan for another home purchase later on? Any feedback is appreciated. TIA

At 4% interest, I bought investment properties which easily met a DSCR of 1 or greater, even when using the market rental value which was always less than the actual rent I receive from my tenants' federal housing choice vouchers (HCV). However, with the rise in interest rates, I am fairly certain that a threshold ratio of 1 will not be met.

If I were able to acquire my next investment through cash and/or bridge loan, install my section 8 tenant and show a couple of months of rental payments, is there a lender out there that would use that lease and its accompanying Housing Assistance Payment contract I would have with the local housing authority? The DSCR using market rent is more like .50.

Thanks in advance!

Ok ill start by giving a little background about myself. Over the last 2 years I have acquired 3 multifamily units totaling 7 rental units. On the first unit my business partner and I paid mostly with our own cash. The other 2 we borrowed private money and have been paying mortgages on. The properties are currently netting roughly between $7- $10k a month. After expenses we have a positive cashflow of roughly $5200. This year we invested in our first Flip. We bought a house in a prime location in Houston for $255,000. Initially we were planning on doing a little TLC and getting it back on the market. After getting quotes from our builder we decided to keep some of the existing structure but tare down the larger portion of the home and rebuild a new home. The cost of reno will be roughly $200k. We funded the deal with a hard money loan for the purchase and reno and a private loan for the down payment. All in we are at $495,500. We estimate the ARV will be between $800-$850k.

The dilemma I'm facing is whether to sell the property, pay off the debt and pay taxes on the capital gains. Or if I should sell the house to our business, refi the home, pay the investors and hold the property for a year or two and then sell. It is my understanding that I can avoid paying capital gains taxes this way. True? I'm not sure I would qualify for the $800k loan using my personal income and credit. Not that my credit is bad. But as you all know when you're first starting off rack up a lot of debt is easy. What are my options? Currently we have an equity loan on one of the 3 properties we own. The other two we have private loans (family and friends) on. Any advice would be greatly appreciated! 

With interest rates going through the roof, I’m curious about what people are seeing with regard to refinancing investment properties, especially those that are at a lower price point.
I’m looking to invest in smaller 2 to 4 unit buildings, but I am worried that I will run into issues with the interest rate, or with lenders refusing to do a refinance given current market conditions.

any advice would be greatly appreciated. Thanks!

@Stephanie P. 

Hi Stephanie, our bank will typically only charge 0.5 points with 15% down and credit above 700.  For our primary residence and 2nd home (vacation home) no doc loans we are similar.  Yes, we have primary home no doc loans up to $3M here in California and various other states! 

Hey all,

got a bit of sticker shock at 6.7% 30 year fixed with 5 year pre payment penalty. Prior loan was done literally a month ago at 5.5% and 3 year pre payment. Is 6.7% really market rate now? Plenty of experience already, great credit and property cash flows fantastically. I was hoping for like 6%. 

What has been everyones experience with using the rent estimator and then getting a DSCR loan and getting the rent appraisal? Has it been close, comparable, or way off?

And if there has been a difference, how much was the difference and why do you think it was?

Hi all! Wanted to update as I spoke with what feels like dozens of lenders and brokers and got dozens of rates and promises. I ended up starting with a few (lower rate!) who had massive increases in the interest rates (over 2 points!) in a weeks' time. Also during that time, started to lose confidence that those same mortgage brokers I had been speaking to could close the deal (terms kept changing). I had less than a month to get funding (was already under contract when my initial preapproval bank fell through). Several other lenders couldn't make it work as the rates started rising as it was based on LTR DSCR numbers. I ultimately went back to one of the initial quotes I got from this very board and post. @Jared Rine saved the deal. Literally, figuratively, you name it. The initial quote he gave me stayed true. He was able to fund in less than 2 weeks. I cannot stress this enough - his communication and competence were leaps and bounds above everyone else. He was not only a pleasure to work with, but he knows what he is doing and THIS MATTERS MORE THAN YOU THINK. The reason I was in such a tight spot in the first place is because my first broker didn't fully vet what he should have (despite my protestations). So, long story short - go with someone highly recommended.

Feel free to reach out with questions on my particular deal and why it was so tricky. Couldn't be happier with Jared.