DSCR loan rate is high

[Nelish Patel]

Hello everyone. 
looking for some advice. Found a property I like to make an offer on. Contacted local DSCR loan officer and was told the best rates would be 7.325% with 30% down and that's with two points. This seems high. When running numbers these property comes as negative flow. Anyone recently done DSCR and have any advice for me?

[Logan Singleton]

Hello, The rate quoted is competitive in this market. As for the downpayment, the lender might be requiring more down in order to meet DSCR requirements.

[Austin Clarence]

The pricing you mentioned sounds about right. You might be able to shave off about 1 point or so. But nothing that is going to impact the cash flow on your deal. If you are going to take the deal I would try to find options that do not have a prepayment penalty or maybe up to 1 year. You should be able to find that for your deal with similar pricing if you shop around. This way you can refinance when rates drop within the next year or 2. 

[Nelish Patel]

Is it possible to get an investment loan? Are rates any better? 

[Jason Park]

Quote from @Nelish Patel:

Is it possible to get an investment loan? Are rates any better? 

Hey Nelish, 
Rates are similar as prime rates are a bit higher, we are in an environment of higher interest rates then a few years back. There are however different vehicles and scenarios that may help achieve your goals

Hope this helps! LMK if you need anything else! 

[Russell Brazil]

That's a descent rate today.

[Robin Simon]

Quote from @Nelish Patel:

Hello everyone. 
looking for some advice. Found a property I like to make an offer on. Contacted local DSCR loan officer and was told the best rates would be 7.325% with 30% down and that's with two points. This seems high. When running numbers these property comes as negative flow. Anyone recently done DSCR and have any advice for me?

 It can depend on factors, sounds like in the ballpark but definitely smart to shop around.  Rates have unfortunately been horrible lately with big spikes just in the last couple of weeks so even quotes from the beginning of the month are probably out of date at this point.

[Brittany Minocchi]

Hey Nelish - 

Not enough info to say for sure whether that's a competitive offer. It will depend on your FICO, loan amount, property type, number of units, level of experience, etc. Is that two points origination or discount points? Happy to chat further if you'd like to connect. 

[Patrick Roberts]

Low 7's on a DSCR is very competitive right now. WSJ Prime is 8.5% and most primary residence/FTHB mortgages are high 6's to low 7's. For DSCRs, you'll get the best pricing at/below 70% LTV and above 1.25x debt service. The higher your FICO, the better. As someone else said, property type will affect the rate/pricing, also. I've quoted 3 DSCRs in SC in the past week- all of them were between 7.25% and 8.5% for 30 yr.

Cashflow is hard to find in SC on LTRs these days due to the explosion in home prices in the last 5 years.

[Anna Buffkin]

My lenders have all quoted between 7 and 8% which if you look at conventional owner occupant rates really the premium we pay on investment loans is dropping.  They're quoting me less than a 1% more than the average owner occupant rate.  When rates were low it was closer to 1.5%.