Would you use a DSCR to scale today?

[Jason V.]

I have a triplex worth about 330,000. I am about 10 years in on the property and have about 100,000 on the mortgage at 3.875%. Assuming I find another multifamily that would cash flow, how would you all finance the deal. DSCR loan? I am not interested in investing with anyone, just looking for some advice on how to scale without giving up too much cash flow. Thanks!

[Mark Munson]

Hi @Jason V.

I would seek a 2nd position lien before refinancing into a DSCR loan at a much higher rate. Your rate would be above 6%+ with the current DSCR rates and losing the 3.875% rate obviously isn't ideal. If that is not possible, then I would ask myself if the increased cost of capital to access the equity is worth the next deal's profits/benefits. Without having another deal in mind, it is truly impossible to concretely answer your question. If getting another $100k in cash unlocks a large flip profit to keep scaling/injecting capital into your business or a great cash-flowing property that outweighs the increased capital cost on the triplex, then go for it.