DSCR Loan Length

[Ronald Fontenot Jr]

I've found a 4 plex that has piqued my interest. It's recently remodeled and vacant, but ready for renters. It has one 2/2, two 2/1s, and one 1/1. I've run analysis conservatively and it seems it will cash flow fairly well. 

I'm not interested in house hacking, my family is too large for the 2br units. I'm a 1099 and always have been, so leaning toward a DSCR loan.

How long are typical DSCR loans offered for? And do they require the units to have a track record of rent as they are vacant and seller has no rent roll or ledger.

Any advice appreciated!

[David Bilandzija]

@Ronald Fontenot Jr Like Doug stated, DSCR loans come in several forms. The most common I see investors elect is a 30 year fixed payment option. To qualify for a DSCR loan you'll need to have those vacancies filled and thats where a few steps come into play(more on that below). Factors like your credit profile, experience and cash flow will effect the lending decision and terms offered.

The process is pretty straightforward when working with a property not yet stabilized.  As a mortgage broker I advise my clients to do the following:

1. Acquire the property with a short term bridge/hard money loan, i.e. 12 month interest only, no pre-payment penalty/no income verification/no appraisal

2. Fill the vacant units and get signed lease agreements.  This is referred to as stabilizing the property.  

3. While stabilizing the property you'll wait out a 3-4 month ownership seasoning period depending on the loan program you choose. Requirements differ from lender to lender.  These are current guidelines with two of the more competitive lenders in the space.  

4. Stabilized and seasoned. Ready for refinance - DSCR loan

Good luck, let me know if you have any questions.