DSCR Loans: Is it true they DON'T allow you to make ANY renovations?

[Dan N.]

Just got off the phone with a lender that was interviewed recently on Dave Meyers' podcast.

Had some of the best terms I have come across so far for DSCR loans.

BUT

They DO NOT allow you to do ANY renovations (maximum paint) to the property, even if you finance the renovations with your own funds (as opposed to adding it to the loan).

Is this normal?

[Mark Munson]

Hi @Dan N.

DSCR loans don't lend you rehab money whatsoever and the properties have to be in rent ready condition. To be specific, most guidelines call for the property to be in C4 condition with no issues with the 4 major components: roof, HVAC, electrical, and plumbing.

I have done 100s of DSCR loans on the lending side and as far as a lender preventing you from doing rehab after you have closed, I've never heard of that. How would they even know? They are selling the note to Wall-Street within 30 days and they aren't policing the houses. If you tell them you are intending to knock down walls or do major rehab, then of course they would probably just steer clear of financing the deal. If you need any advice, feel free to reach out.