All Forum Posts by: Brian Ellis

There are so many different qualifications for DSCR loans depending on the lender/investor.

Each has their own set of rules. Typically they want good credit score, landlord experience, and 20% down.

You can get ones that will either use current rents OR market rents. Some need rent ratio of .9% and others up to 1.2% 

Interest rates fluctuate quite a bit. But there are options for interest only first five years. 

You’ll have a pre payment penalty.. likely 3/2/1 or 5/5/5

Bottom line. Shop around. Find the lender who knows a lot of people. There are many diff options.

Quote from @Esta Ryder:

We do own a STR so I am going to give you a mix of advice as an owner and also as a guest. We have 4 boys so we primarily stay in STR while on vacation as it is very hard to find hotel rooms that fit out family.

Most importnat to me (and to guests if you don't want bad reviews) is to be VERY clean.  Guests definitely like updated but they also like character and want it to fit the area.  Personally, I like to see updated comforters and decorative pillows.  I don't want to feel like the comforter on the bed is 20 years old- that is just gross to me.

As far as the washer and dryer, due to our family size and the length of time we travel, I personally won't rent a place without access to one- and it has to be in the unit, not a shared one down the hall.  However, if it is typical in your area to not have a washer and dryer, then don't worry about it.

I think that it is great that you are reaching out to people to make sure that your journey is successful.  Good luck!

Thank you for your guidance. It is common for houses in the area to provide a washer and a dryer. Unfortunately I wanted to rent the basement LT to limit my risk a little bit, and it currently holds the washer and dryer. 

I could potentially install one, although I believe it would be pretty costly. Maybe it’s worth the investment?  

Off market is the way to go. You will have far less competition, if any at all. And you can usually grab it at a better price where the #s work.

It is not easy to find off market properties, though. When you are looking at the MLS listings, all the hard work has already been done. Either the listing agent found the seller, or the seller decided to sell BEFORE anyone else got to them.

Generating leads is a lot of work, it either costs you time or money. I prefer using my own time to write mailers, cold call, etc. The old fashion systems work if you put them into practice.

I sent about 600 personal letters (targeted properties), and cold called about 50 of them before I landed something. But the majority of the work is getting the list of properties you want to advertise to, getting the homeowners address and contact information, and then getting them to listen to you for 5 minutes. 

Hi BP

As I continue to expand my portfolio and business, I am adjusting with the market conditions.

We plan to rent our primary out through Airbnb. I am not super familiar with this investment vehicle, I've always done LT rentals and have done well with it. But in order to expand that area of my business, I need to get into the STR space.

For those that have been doing it with success, what have you found to be the most important areas to perfect? As I’m remodeling, and doing touch ups, I always notice something that needs to be done. Usually minor things, but I would consider them important if I were renting.

Unfortunately I am unable to provide a washer/dryer because it will be a “shared home”, but guests would have access to the entire main living floor with privacy. I’m a bit worried about this, what are your thoughts?

Thank you for your help!

Quote from @Manley Woods:

I’m looking to purchase some rental property in the Saint Louis, MO area but the majority of the properties in my price range are older (built in 1910’s to 1930’s). Has anyone had any positive or negative experiences with properties this old? Should I just continue to save until I get enough for a newer property (something built in the 1940’s or 1950’s lolol)? The areas I’m looking to purchase in are rated as (A) and (B) neighborhoods and I’m interested in buying and holding long term.

Here In MA, im pretty much buying only older homes, unless I want to pay a premium and get no cash flow.

They don’t scare me away because I’m a very hands on landlord. Things I look for:

- Solid foundation

- somewhat updated electrical and plumbing 

- Carry beams and joists in good shape

Just my two cents. 

Quote from @Robin Simon:

Quote from @Brian Ellis:

Do they allow market/future rents to calculate? Or do they use current rents?

What ive been able to gather is that they will allow future rents if the place is vacant, and current rents if they are occupied.

Finally found an off-market deal and running into financing issues. I either need to bring the loan down by a bigger down payment which I dont have, or ask for seller financing. But I believe the bank may have an issue with seller carrying a second note in the form of a down payment?

Any help or suggestions would be appreciated.

If it's an acquisition loan (which this sounds like) - then most DSCR lenders will underwrite the market rent as determined by the appraisal (1007 form). Some DSCR lenders that are particularly specialized in Short Term Rentals can use projections from places such as AirDNA as @Scott E. mentioned, but property will have to be fully indicated as use for STR. DSCR lenders will also pretty much universally not allow a second note

This was the advice I had received from my lender. They will use market rent.

Do they allow market/future rents to calculate? Or do they use current rents?

What ive been able to gather is that they will allow future rents if the place is vacant, and current rents if they are occupied.

Finally found an off-market deal and running into financing issues. I either need to bring the loan down by a bigger down payment which I dont have, or ask for seller financing. But I believe the bank may have an issue with seller carrying a second note in the form of a down payment?

Any help or suggestions would be appreciated.

10 Year treasury is way down because of all this, meaning interest rates are going down.

Not sure about you guys, but in my area we have lines out the door for open houses. I only see this creating even more demand for an already lacking housing inventory. 

Interesting times for sure...

Quote from @Bruce Woodruff:

Quote from @Brian Ellis:

Funny, I see all 3 of these in my area (AZ) and I hear this is common across the country. Maybe move to another state or city and try your luck there.

You have a point here. I will admit, I haven’t done much research in any markets other than my own. 

Quote from @James Hamling:

Quote from @Brian Ellis:

Quote from @Bruce Woodruff:

Quote from @Brian Ellis:

I think this is a great time for investors coming up....should be more inventory, lower prices and less competition. So what interest rates are back to normal....I don't really see a downside here....

But we dont have more inventory, we dont have lower prices, and there is definitely not less competition.

I guess my point is that a newbie is going to have a really hard time getting into the game, and the mom and pop landlords (like me) will have a hard time getting deals that actually make sense, and the guys with all the money will continue to purchase in cash essentially pushing out every other competitor.  It will stay that way until we see more inventory, and we havent seen it in YEARS.

 I hear ya, I do, but it's all just excuses. It is. 

Your not finding deals. That's a you statement. Why you decide it's the markets fault that you are not finding deals, I don't get it, your ignoring your own words. You. You didn't say the markets not finding you deals. But, that IS what your following it up with, it's the markets fault. 

No, it's your fault. You need to work on your business. 

If a hot dog stand opens in a parking lot and slays it the first 3 months, lines for hours. And than, over 3 weeks it putters down to where all of a sudden only 4 people per day come. Does the hot dog stand just sit there and say it's the parking lot's fault, and just sit and wait? No, the hot dog stand owner asks "what changed?" and then get's to work sorting out what changed and how HE can change, pivot, adjust, evolve, MOVE to get busy again. 

I am so exhausted of the pity party on BP. No, NOT the markets fault. GET TO WORK, or get replaced. That's reality, if you don't get busy working you will get replaced by those who will. 

I find no less than half a dozen "deals" a month, that's a very dry month. On average, per week, that's a very real #, half a dozen per week. And I am a very small volume operation, very. It's not rocket science, it's just work. 

Stop making excuses, make solutions. 

Why are you so upset?

I’m not complaining, I’m just speaking facts. Me and you are in two completely different markets. I value your opinion, just as much as the next guy. But right now, it has never been tougher to invest in MA. It is what it is.

I will continue to work towards my goals regardless. I’ve achieved quite a bit in the few short years I’ve invested, so I think my opinion carry’s some weight.