Help with DSCR financing options

[Jemma Jacques]

Hi there,

I was supposed to close a house last week in Milwaukee. But the lenders have been a nightmare, there was a small amount of seepage in the appraisal and they want it fixed before close. (Basement to get sump pump) I’m already way past closing and the cost is $6k. Seller is frustrated. Won’t pay for repair and I like the house and our deal.

Any thoughts on what to do? It doesn't really need to sump pump but that's the only way this lender will let me have it…. I don't want to pay to fix it and then for what ever reason it doesn't close, it's a DSCR loan under 100k so not easy to get lots of lenders for, I was thinking to buy it all cash and then refi down the road?

Any advice welcome

[Doug Smith]

Quote from @Jemma Jacques:

Quote from @Doug Smith:

I think more info is needed here. Although a DSCR is lenient on your personal income, they will still require a relatively clean appraisal. You might need to flip this to a "flip" or "renovation" loan depending upon the circumstance. Are you buying this personally in your name or in the name of an entity? What is the purchase price? Do you plan on rehabbing it? How much cash are you bringing to the table and what will the loan amount be. Let's start there and perhaps I can guide you in the right direction.

The property price is $95k
im buying under my llc (I am single owner)
no I don’t plan on rehabbing already done, I was going to bring in $26k cash to close.
loan was for $72k

I think you're going to have to go private/hard money to acquire the property and the repair the basement. Can you also pull enough to augment the property value...say add square footage, etc...to get the ARV up to $135Kish? If you can find a way to do that, in 6 months you can use the appraised amount to take out the hard money loan using a DSCR loan with pretty much any lender at 75% LTV. Most (including us) are going to have a lower-end limit of $100K. You can borrow more than 75%, but you have to be mindful of cash-flow and interest rates. I would keep the LTV down a bit if you can. I hope that adds value for you.