All Forum Posts by: John Matthew Johnston

@John Matthew Johnston

I did my first 10 with conventional loans. Interest rates were much lower. But if your DTI is too high, then go with DSCR or commercial loans. I've done a few 30 year fixed DSCR loans and they're great. And I've done 4 commercial loans which aren't bad. But they are 5 year ARMs with a 25 year amortization.

 Hey John,

First, you're not "only a nurse".  You and your colleagues are the backbone of health care, so thank you.

I'm a DSCR broker (full disclosure).

I always recommend borrowers exhaust their conventional financing before venturing into commercial or DSCR, especially if they're in it for the long haul. The rates, over time, will pay you back handsomely. Once you get to a point where either you don't qualify or don't want the hassle, then DSCR is a great way to go because of either the interest only option that gets you better cash flow or the 30 year fixed option. Commercial with a shorter amortization is last in my opinion.

 @John Matthew Johnston The advantage to a commercial loan/DSCR is that the property itself qualifies for the loan by the rental income it brings in. In other words you do not qualify with tax returns, pay stubs etc. However, assuming you give your personal guarantee which you almost assuredly will, it does not lesson your debt to income ratio on the next full doc loan you go to get.

As you have seen commercial/DSCR loans have drawbacks either in adjustable rates, shorter amortization, higher rates/costs and possibly pre-payment penalties. So, IF you can qualify with your W-2 income along with your rental income the 10 conventional loans will give you by far the best terms. if you cannot qualify (but make sure you have a very competent loan officer go over your file before you decide that) then the DSCR/Commercial approach can be valuable.

As for the refi portion of your post the key to that is have a plan with your LO before you ever purchase a property. You tell your LO what you are looking to do with a particular property and they should be able to lay out a step by step program for how it will work. If they can not do that, find a new LO. 

Hello John, what kind of assets are you investing in? Based on your post it sounds like it is single family homes. I am honestly surprised that you were able to get a commercial loan for them as single family homes and multifamily are evaluated very differently. Assuming they are single family though, the DSCR loan is exactly what you need. The lender will choose to lend to you based on the cash flow of the deal not your DTI. If you have some properties that are >15=20% equity you should look into refinancing a couple into DSCR loans which will lower your DTI or just use DSCR loans going forward.

@John Matthew Johnston just curious, where are you seeing the 15-20% ARV reduction?