DSCR for Value-Add

[Joshua Nackenson]

I'm curious how banks looks at DSCR for properties that are value-add. Specifically, a property where there is not any significant cap-ex, simply gross mismanagement.

ie. The market is NOT over-saturated, but rents are 30-50% below market rents.

Will the banks underwrite based on the current NOI or based on projected NOI for Year 1?

[Devin Peterson]

Quote from @Joshua Nackenson:

I'm curious how banks looks at DSCR for properties that are value-add. Specifically, a property where there is not any significant cap-ex, simply gross mismanagement.

ie. The market is NOT over-saturated, but rents are 30-50% below market rents.

Will the banks underwrite based on the current NOI or based on projected NOI for Year 1?

A majority of the non-am lenders who use DSCR loans will use the rent schedule off of the appraisal. As long as the rent on the appraisal covers your monthly mortgage payment (PITI) - you'll be pass. Gl!