Apt building financing and personal finances

[Paul M.]

I'm learning about/shopping for financing for 5+ unit residential properties, after having only owned 2-3 unit buildings. I'm finding that the banks only care about the property itself supporting the loan, even though they are not non recourse loans. Having a high income or net worth ("global factors") doesn't seem to factor in (I imagine it would factor in if personal finances were negative though!). In the 2-3 unit world it was always the combined finances that fed into a debt to income ratio and that was the hurdle. The rent to market value ratio is weak on some properties in my area so it seems to meet the 1.2-1.25 DSCR I've usually been quoted I have to put down 40%. (I realize that I could go to another area with more favorable cap rates etc, but I don't wish to do that for various reasons beyond the scope of this post)

My question is if I keep shopping will I find a bank that will lend at a weak DSCR based on my global finances or are property finances always all that matters? I have been talking with local banks. I spoke with one national bank and that was a waste of time (they required 1.5 DSCR and 50% LTV)

[Todd Dexheimer]

All lenders will care about your personal finances, liquidity and experience. They will all care about the property and area as well as your business plan.

Local and Regional banks will require a recourse loan in most instances and will want a 1.25 DSCR unless you are doing a renovation loan, in which they will look at future DSCR and ARV.

National banks are the same, but sometimes will do non-recourse and usually won't do much of a renovation loan

Agency debt will do non-recourse and will want 1.25 DSCR. They also want to see your net worth at or above the loan amount and your liquid cash equal to 8-9 months of P&I payments.

Bridge lenders will loan non-recourse and do under 1.25 DSCR. They are a good option for a renovation project. They usually want to see 8-12 months of liquid cash and net worth equal to the loan amount.

Here are some more basics: 

https://www.biggerpockets.com/member-blogs/10145/7...