All Forum Posts by: Tony Severance

@Jason Wray  Got it!  Thanks for the explanation.

@Jason Wray Thank you for the clarification of your position. I appreciate your experience as I have 26+ years in the business. You said above that your "DSCR programs have a (No Prepay) option." We all have options for no prepays, but they come at a cost. Are you able to offer your no prepay option at no additional cost to the borrower in either points or rate, or do your DSCR loans simply have no prepay penalties at all?

@Jay Soriano Something to keep in mind when considering a DSCR loan is that they come with pre-payment penalties. The standard PPP is usually 3 or 5 years. You can buy the number of years down by increasing the rate, but it isn't cheap.

@Kenny Simpson This is a great point you bring up. When discussing the possibility of a DSCR loan with clients who have been shopping around, I often find that when I bring up the pre-payment penalty it is the first time they have heard about it. I even had a client tell me that another lender said that the DSCR they offered at 2 pts below market rates did not have a PPP. This is unfortunate on several levels because it is extremely important to make sure clients are educated about all of their options, including the PPP options associated with DSCR loans before locking them in so they are going into the transaction with full knowledge and eyes wide open. Given the current overall economic environment and associated interest rates, most of my DSCR clients are choosing 3 year PPPs.

@Nils Fischer Keep in mind that closing of escrow can be a bit tricky from thousands of miles away in a foreign country.  It can be done at a the US Embassy or with the use of an Apostille, which is basically an internationally recognized notary for countries that participate in the Hague Convention of 1961.  Switzerland is a member of this convention. 

Here is some additional info about tax ID numbers to go along with your LLC: You can't file an EIN as citizens do, but you must file a taxpayer identification number, AKA ITIN or TIN, with the IRS so you can do business in the U.S. and be taxed accordingly. The process to get a TIN is not difficult, but it can take many weeks.

Jason, be careful about recommending using a DSCR loan as a quick hit to buy the property, then refinance out of it shortly thereafter. Most, if not all, DSCR loans have pre-payment penalties. Yes, the penalties can be bought down, but that is a very expensive proposition.

@Ben Grubner  Remember to get your Financing strategy in place before you make an offer on a property.

@John Guerrero  Welcome to BP!!  This is a GREAT resource for learning how to be a successful investor.  I have been a Texas lender for 26 years.  Feel free to contact me any time when you have questions about the lending side of the business.

Congrats on your first purchase!!  The first step is always the hardest.

Hi Everybody, 
Sorry, but I am just now seeing this month old post. As others have mentioned, it is very common to close on a STR in the name of an LLC. And yes, DSCR loans often close this way. It is not difficult to execute this type of closing. However, as both prices and interest rates have increased, it has become more difficult to qualify STR purchases using 1007 rents. This is where using the short term rents to qualify for DSCR loans has been so powerful. We all know that STR is typically much higher than annual lease amounts, so using the short term rents is critical to making these deals work. As @Eliott Elias mentioned, the LTV may decrease by 5%, but that may also depend on the borrower's experience with STR's. Ping me if you would like more details about how this works.