Question about DSCR

[Julian S.]

Hi everyone,

I am a house flipper hoping to segue into rental properties in the near future in hopes of earning cash flow. I have short term goals of house hacking a fourplex, and long term goals of owning larger apartment buildings.

My question is regarding debt service coverage ratio (DSCR). From what I've been reading about the types of loans I will be pursuing for multi family buildings, I should be looking for listings where the DSCR is 1.2 or greater. Am I missing something or are properties yielding such a ratio basically non-existent? Are such deals only attainable if you can rustle up a seller on your own and persuade them to sell at a discount?

Would the correct course of action be to purchase a value add property using a bridge loan, rehab, raise rents, and then find a proper loan with better terms?

I should mention that I have a nest egg of about 1.5m at my disposal. Does having a decent net worth afford me any flexibility from prospective lenders?

Thank you for any insight.