Catch 22 Situation -DSCR Valuations

[Daniel Purcell]

Hello all,

I’m coming to write this to seek advice as to where to go from here. It’s a bit of a saga:

We bought a property in Sevierville, TN for roughly $500k through a construction loan. We put about $350k (100k in private money that needs to be paid back asap) into it. 2 different appraisals came back at 1.45 and 1.35 million. We gut renovated and put in high end finishes to make it a luxury STR (We are STR vets with a proven proof of concept). Three different DSCR programs said we could get 70-75% LTV. 680 credit score or higher. We've been 5 weeks at it now and one lender will do $825k at 12% and the others are pulling us around. We truly found a gem with 4 acres and a pond 10 minutes from the Parkway. Our real estate agent said we could get between $1.2-1.4 million.

We would prefer to keep the property and gross $12k-$15k/month and cash flow $2-$3k. Credit score has dipped to 680 from the 750 it was before this process. We’ve bought furnishings and some of the renovations on credit cards which have lowered the scores. These lenders seem to over promise and under deliver. They all can “get it done” but all of their underwriters want to give us nothing in terms of equity.

This is a special property and we can’t find a private investor to either give us a 30 year amortization with a balloon (2,5,10) at the appraised value or a private lender who can actually give us any equity without killing us on rate. The lender above was blue gate. The local TN ones want a 700 or above score. Obviously we’re going to pay the private $100k and cc debt off with the cash out refi while still having cash reserves. All the numbers work on our end.

Any advice/guidance would be much appreciated.

Thanks Everyone!

[Daniel Christopher]

Quote from @Daniel Purcell:

Hello all,

I’m coming to write this to seek advice as to where to go from here. It’s a bit of a saga:

We bought a property in Sevierville, TN for roughly $500k through a construction loan. We put about $350k (100k in private money that needs to be paid back asap) into it. 2 different appraisals came back at 1.45 and 1.35 million. We gut renovated and put in high end finishes to make it a luxury STR (We are STR vets with a proven proof of concept). Three different DSCR programs said we could get 70-75% LTV. 680 credit score or higher. We've been 5 weeks at it now and one lender will do $825k at 12% and the others are pulling us around. We truly found a gem with 4 acres and a pond 10 minutes from the Parkway. Our real estate agent said we could get between $1.2-1.4 million.

We would prefer to keep the property and gross $12k-$15k/month and cash flow $2-$3k. Credit score has dipped to 680 from the 750 it was before this process. We’ve bought furnishings and some of the renovations on credit cards which have lowered the scores. These lenders seem to over promise and under deliver. They all can “get it done” but all of their underwriters want to give us nothing in terms of equity.

This is a special property and we can’t find a private investor to either give us a 30 year amortization with a balloon (2,5,10) at the appraised value or a private lender who can actually give us any equity without killing us on rate. The lender above was blue gate. The local TN ones want a 700 or above score. Obviously we’re going to pay the private $100k and cc debt off with the cash out refi while still having cash reserves. All the numbers work on our end.

Any advice/guidance would be much appreciated.

Thanks Everyone!

Those rates feel a bit high for this deal. We’ve been quoting in the 7%s and 8% range for cash out refis lately. 

Just shot you a request to connect. Let’s chat about this. Confident we can help.