DSCR loan without clear title?

[Kristi K.]

I have a property that I bought on Dec 6 2021 at a tax sale for $70K in Shertz Texas. I put $64K into it, new roof, upgraded to 200 amp electrical, rewired 100%, all new plumbing, beautiful original hardwood floors sanded and polyurethaned, tile in bathroom and laundry room. It appraised for $270K but that was last July at the peak. I am keeping it as a long term rental and they moved in July 1 2022. I want to take a DSCR loan out on it but the lenders I normally work with won't do it until two years after the day I bought it because my title company won't give clear title until after two years EVEN THOUGH the rights of redemption for a non homestead home is only 6 months. I'm not desperate but I have a lot of equity there that I could be using for some other money maker. Any DSCR lenders out there that will do it without title? I'm not willing to pay hard money interest rates.

[Robin Simon]

Quote from @Sanat Bhandari:

Quote from @Kristi K.:

I have a property that I bought on Dec 6 2021 at a tax sale for $70K in Shertz Texas. I put $64K into it, new roof, upgraded to 200 amp electrical, rewired 100%, all new plumbing, beautiful original hardwood floors sanded and polyurethaned, tile in bathroom and laundry room. It appraised for $270K but that was last July at the peak. I am keeping it as a long term rental and they moved in July 1 2022. I want to take a DSCR loan out on it but the lenders I normally work with won't do it until two years after the day I bought it because my title company won't give clear title until after two years EVEN THOUGH the rights of redemption for a non homestead home is only 6 months. I'm not desperate but I have a lot of equity there that I could be using for some other money maker. Any DSCR lenders out there that will do it without title? I'm not willing to pay hard money interest rates.

I'll be honest with you here, it'll be very hard to get any loan (not just DSCR) without a clear title. Lenders are VERY protective of their funds and title is a major component of real estate. I'd suggest working with your title company to get a clear, unclouded/unencumbered title on the property.

Don't be afraid to ask a different title company for their opinion on title if your current title company won't budge, there's plenty of them out there

Alternatively, try asking a local bank/credit union to give you a LOC against your equity in the property. Most will do a title search but you may just get lucky and find someone willing to forego it. If you actually find someone willing to forego the title search, make sure you develop a strong relationship with them because you might have just found a lending unicorn

 This is accurate however if you can find a lender and title company with niche knowledge in the tax lien area its workable.  For example, Texas is a unique state in that there is an entire tax lien lending industry concentrated in a handful of companies, and the rules are somewhat opaque but clear regarding right of redemption (specifically around homeowner age and owner-occ vs. non-owner occ).  If you can find a lender that knows the area, they won't be automatically "scared off" like a larger, national more cookie-cutter company may