I also underwrite the borrower, confirm insurance, and make sure there’s lender title protection — those steps alone help eliminate many of the common pitfalls I see new lenders encounter.If you’re just getting started, it’s helpful to get clarity on: • the collateral securing the loan • the loan-to-value • borrower track record • how your SDIRA custodian handles notes • what protections you should have in placeI’m happy to share what I’ve learned — I really enjoy helping people get started in private lending.

For a <7-day average stay, you’re right that the activity is not automatically passive, and the 100-hour + “no one else worked more” test is commonly used.

Since almost all of them are DSCR loans, it is not common to call them that, like it is something unusual.Commercial loans are usually based on the corresponding treasury rate plus a spread.

We discovered a few things  on the application that I don't know how to think about:- Applicant has 5 bad debt accounts that were charged off, most recent one 6 months ago auto loan, $12k in outstanding debt (applicant indicated it was a bureau error)- For prior landlords and personal reference - we did a reverse phone look-up; in all cases the phone numbers were registered under a different last name than what was on the application and that last name matched the applicant's (no exception - for all of them); TruePeopleSearch and similar sites all indicated that the applicant and landlords / reference are all part of the same family and all had some connection to the common address- That said the applicant's FICO is 640+ and there is a verifiable source of income from steady employment (government job)What is your advice regarding this applicant?

This is actually a really common path and often one of the easiest ways to get started with rental real estate.

LTV Based on Purchase Price(Common for conventional or some hard money lenders)If the loan covers the purchase only:LTV=Loan AmountPurchase PriceLTV = \frac{Loan\ Amount}{Purchase\ Price}LTV=Purchase PriceLoan Amount​Assuming a full purchase loan of $270,000:LTV=270,000270,000=100%LTV = \frac{270,000}{270,000} = 100\%LTV=270,000270,000​=100%➡️ 100% LTV (purchase-based)🔹 B.

I suspect your insurance number is low. 35 to 45% all in costs is pretty common if you have 3rd party management. keep in mind cash flow on top of all cost is only one component of the investment and in my mind not always the most important unless your buying in an area that is depressed and you think values will be stagnate for basically the life of the investment then positive cash flow a very important factor. 

Usually 15% at a minimum but 20% is much more common simply due to pricing.What many people do is live in a house for a year or two, then convert it to a rental property when they buy another house to live in. 

It's a common misconception. 

The concern from the secondary capital markets lies in the following: Residential assets are appraised as, and commonly zoned as, their highest and best use.