Lending options for my situation please. 2022 tax extension + house needs renovation.

[Phillip Rosin]

I have a house under contract. 245K purchase with ARV 425K. Rehab will be around 50K. It flooded and is currently in the post flood state. A portion of drywall, flooring and cabinets have been removed but there is no rot or any structural issues. The current owners are living there and they do have a functional kitchen and bathrooms. It does pass a 4 point.

Also, I work W2 and do well, but I haven't filed my 2022 taxes yet (extension from accountant moving to a new company). I have two duplexes, which I have owned for about 3 years, but two of the units had been under renovation or occupied by me for a portion of the time, so historic rental income isn't reflective of current conditions with all 4 units now rented. I am currently renting where I live.

With the current rental income I am well within DTI limits with the new property. However, I'm concerned about getting lending having not completed my 2022 taxes yet and also not being fully rented for 2021 and 2022. I'm also not sure if, as a backup, DSCR will be an option with it being in the current condition.

My questions are:

Should I be able to get a DSCR loan if the property is livable but in need of renovation, for which I do have proof of funds? If so, feel free to recommend some lenders (if that is allowed).

Might I still be able to get traditional lending even if I haven't filed my 2022 taxes yet? If so, feel free to recommend some lenders (if that is allowed). 

Any/all other ideas/advice greatly appreciated! Thank you!

[Doug Smith]

Hi @Phillip Rosin, I just answered your other post and I just saw this. I would forget about using a DSCR for now. Provided this is a rental and not a home you occupy, then the best route would be a short-term bridge loan for the renovation. Treat it as if it's a flip. The rate's higher, but there's no prepayment penalty, it's quick, and when you're done with the reno, you can refinance it using a DSCR or even a conventional form of financing.

From a lending standpoint, a DSCR is not going to require the taxes, but if you're going conventional for the take-out after the renovation loan is complete (the bridge won't need your taxes), then you either have time to get the 2022s done, or we would take the 2020 & 2021s with a Profit/Loss and Balance Sheet for 2022 plus a Year-to-Date profit/loss and balance sheet in your business. If you aren't in business for yourself, which I assumed you are since you mentioned not having your taxes done, then your W-2s and 30 days of paystubs are all you would need anyway instead of taxes. Good luck to you!