All Forum Posts by: Timothy Hero

My DSCR options are offering 80% LTV around 8% with 1 pt for your tier of credit.

My DSCR lenders are offering 8% with 1 pt and it's low doc and not on credit.

Blow my mind how conventional is screwing investors.

I have the connections for the refinance side when you're ready. I typically stay away from the fix and flip loans, however.

Quote from @Anthony Freeman:

Quote from @Michael Dumler:

@Anthony Freeman, asset-based mortgage products such as a DSCR loan (debt service coverage ratio). DSCR rates and terms will be less favorable than conventional, but if that's the only way to pull your capital back out of the deal, then I would explore that option.

So you're saying there are mortgages that are solely based on my NOI to Debt Service ratio?

Correct. Aside from the cash flow of the property, your credit is another factor considered for approval. But no income, dti, employment, etc.

Quote from @Kaveh Narimani:

Quote from @Erin Elam:

Quote from @Kaveh Narimani:

anyone has worked with any DSCR lenders that they liked? what has been your experience in 2023?

I keep seeing Lima One Capital pop up in regards to offering decent DSCR, but I have not personally used them.

 I did some research on them and it seems like no one is really happy with them, a lot of bad reviews even on BiggerPockets. 

I brought a portfolio purchase to them. Appraised for more than he was under contract for, credit came in solid, and a week before closing they informed me they don't lend to first time investors. I made a scene about this and they stated "it ask on the app if they are experienced. We must have overlooked that."

I checked the app. Turns out, the loan officer sent the old app, that doesn't ask that question.

Like my comment above, this isn't Lima One's fault, but instead a loan officer who needs to pay attention.

That's my only experience with them.

I've been brokering full time since 2019 and have over 200 closings. I've come to realize, a huge part isn't just the lender, but the loan officer assigned to your file.

Quote from @Anthony Freeman:

Quote from @Timothy Hero:

Mortgage lenders borrower money at x rate. The lenders that hold the note profit the difference. Most of the market sells the mortgages, and that's where the money is made.

Commission is for loan officers/mortgage brokers.

 I was referring to the officer that works for the lender. Thanks for the clarification.

 Got it. Commission is good. It requires them to hustle to close. If they were paid salary, it wouldn't matter if your loan closed on time because it makes no difference to them.

Legally, loan officers cannot adjust the rate to pocket the different (also known as YSP/rebate).

Quote from @Chris Seveney:

Quote from @Timothy Hero:

Quote from @Chris Seveney:

@Giora Sela

The rents will be an issue if you want a DSCR loan. Most lenders will want 15-25% down payment and if you get seller financing and put them in 2nd they still will not go to 100% but their rates will be 2-5% higher

This is false.

For purchases, DSCR lenders can go off market rent and ignore the in place leases.

As for the rates, this is false. I have several lenders offering 80% LTV right now for only 15 bps higher than conventional. (maybe you meant a 2nd would be 2-5% higher?)

Correct I noted if you are in 2nd position they will not go to 100% and rates are higher.

Also if your rents are 20% below market value, lets say they are 800 vs $1000 a month, how is that false that it will impact a DSCR loan. A DSCR loan takes into account your rental income. A property bringing in 20% more income will at the same price will have a higher DSCR. The lender will not take a DSCR loan based on "future" rents.

For purchases, many DSCR lenders won't hold the under market rents against you. Some of my lenders will look at the in place leases and if they have less than 6 months remaining, they'll go off market rent.

This is only for purchase, of course. On the refi side, being rented below market rent kills many deals.

What's the value? There's DSCR lenders that'll do 5-20 units, but they often have minimum value requirements of $50k/unit.

MS can have some low priced RE, that's why the price being too low is the first thing to come to mind.

Mortgage lenders borrower money at x rate. The lenders that hold the note profit the difference. Most of the market sells the mortgages, and that's where the money is made.

Commission is for loan officers/mortgage brokers.