DSCR loan work for STR?

[Chris K.]

Does DSCR loan apply to a property you are looking as a STR and not as a LTR?

[Stephanie Medellin]

@Chris K. Yes, but rents will still only be based on market rent, not short term rental rates. There are programs that will allow DSCR < 1 (when rental income does not cover the monthly payment).

[Michael Glist]

As mentioned it will qualify for a DSCR loan. We would be looking at the market rent to figure out the DSCR. So make sure that you know you know the approximate market rent to see if it would affect your qualifications, LTV or rate. You can still get it done if it is less than the standard 1.2 ratio and even if it is below 1.0 but it may come with a higher rate and/or a lower LTV.

[Stephanie P.]

@Chris K.

STR works for some DSCR lenders, not all. There are several that still won't do them. Make sure the broker you're working with is pricing the loan with the right lender.

[Chris Cambridge]

Short answer it applies. Your loan structure varies according to your goals. If acquiring stabilized as opposed to value add and rental experience.

[Andrew George Dennis]

@Chris K.

Were you able to pull this off? I want to pull cash from an STR in Colorado that I own free and clear.

[James Fraundorf]

@Stephanie P. do you know any STR lenders? Looking for one to finance a unique property in MN right now. Thanks!

[Nick Belsky]

@Chris K.

Yes. There are some lenders who will look at the STR for that type of revenue and not jus the standard LTR rate or fair market rate. There are other restrictions of course, but they are out there.

Cheers!

[Kevin Dureiko]

Yes and no, for example we use a percentage of the STR to calculate DSCR. Other times if the property owner is new and there's no solid trailing 12 month, we can use market rent. All depends on how your lender looks at the whole picture.

Hope this helps.