Looking at DSCR Loans and Need Advice

[Michael Dickinson]

Hello all,

I am new to bigger pockets, but I do have experience in real estate investing with SFH rentals in Northeast PA. Due to horrible, and I mean horrible property managers in the area (the one known as being the best admitted to me she recently had an employee steal over a million from landlords and she didn't think it was her fault), I decided to hire a family member full time to start managing properties for me. With that said, I am looking to begin ramping up my buying now that I have someone I can trust out there (I am located out west now).

My goal (which is doable) is to buy properties with a DSCR score of 2 or more and go the DSCR route. I've spoken with a few lenders who are amicable to sub 100k loans, but the lender/broker fees total about 8% of the entire loan amount. Is this pretty average? I'm being quoted by one lender around 8% currently with 30% down and another lender with 20% down. Fees are somewhat similar.

My questions:

1. Are $4800 in lender fees on a $56,000 DSCR loan within range?

2. To preserve capital, can I make slightly higher offers on properties and have the seller pay toward these fees? 

3. Does anyone know if more competitive DSCR lenders who I should speak with about my situation? I also thought about buying two houses in the same deal, but my long term broker (the 30% broker) who said they can not do that. I could bundle multiple loans in a refinance situation down the road but not the initial deal to save on fees.

My next issue is finding a hard money lender who will lend less than 75K.  There are some sub 75k deals out there that would make great buy, repair, rent and hold properties but I'd prefer to be able to preserve my own capital as much as possible to knock out quite a few deals this year and in the next several years. 

Any help would be greatly appreciated.  

[Caroline Gerardo]

Loan of $50000 has same bottom level flat fees that $200000 does. Cost is much higher to finance under $150000 sales price. Title, appraisal, recording, insurance fees have the same floor of minimum costs. Getting insurance on lower cost is also a pickle. 

Our government has laws restricting lenders from closing loans that are small loan and high cost so many will not touch these even if investor. Look up HOEPA and High Cost laws. The laws apply to owner occupant but puts fear of regulation into any lender. 

The cost of all the vendors to process a loan: credit, audit, LOS, tax, Underwriting, processing, verifying every piece of paper is a range of $9000- $11000 per loan. 

Though it doesn't make sense, it's the reality today.