All Forum Posts by: Ko Kashiwagi

Hi Wade,

DSCR loans are business-purpose loans that qualifies lenders based on their credit score and rent/debt ratio (rent/PITI). Lenders typically look for a DSCR greater than 1.0, indicating that the property generates enough income to cover its debt payments.

DSCR loans are not just for SFH purchases - it can be used for condo units and multi-family properties as well. For commercial properties, the guidelines usually differ a little bit, but the main concept is the same. It looks at the debt to income such as the NOI/Debt ratio.

Hi Isaiah,

Property deducted expenses from your rental property can reduce the taxable income generated by the property. Buy and hold rental income is generally considered a passive investment income unless you are a real estate professional. Losses from passive activities typically cannot offset active income (W-2). This is a major reason some W-2 employees get into STR, as managing STR could classify you as a real estate professional with enough activity. With that being said, it's probably advisable to use a tax professional on this topic!

Hi Amir,

It seems like the decision would depend on the value of the property and its potential use. Is the property in a condition that can fixed up and rented, or would it be a complete teardown/ground up build? If there's a lot of potential in the land use, you could possibly partner up with a developer.

Hi Olufunke,

It seems like you are based in Texas? Texas is a relatively landlord friendly state and there are great markets that have both cash flow and appreciation. Personally Tyler is one city I would love to get involved in the future as they have good numbers on population growth, unemployment, income and rent growth.

Other examples of landlord friendly states include TX, AL, FL, AZ, and OH.

Hi Sethu,

I'm not sure how high your DTI is, but if the overall DTI is less than 49%, there are options out there for conventional. Are you trying to purchase this investment property through conventional programs? If you use non-conventional programs like DSCR and hard money, your DTI would not matter.

Hi Roman,

Cape Coral is a great location for rentals. It's an area with increasing population and if the property cash flows, investments will do well there. One thing to keep in mind is the insurance, as insurance can be very high depending on the properties. There are county websites that show specific insurance, water and permit guidelines that are very particular to the area (check if the area has "Flood Zone X"). As another example, some properties have owls that needs to be professional removed before you can build on top. Property values also can vary depending on the water wall rights, as many properties face the water.

Hi Oli,

House-hacking is one of the best ways to get started if you can qualify for the loans. My first question would be, would be (mortgage-rent) be lower than the current rent you are paying? If so, you would be able to obtain homeownership with less monthly expenses you are currently paying. If the answer is no, it would depend on your current income.

For a purchase price near 550k, I would assume that it would be cheaper monthly to own compared to paying 5k. After your first house hack, it would be significantly easier to move onto the next!

Hi Jose,

Is there a specific refinance program you are looking at? A majority of lenders have minimum loan amount of a 100k, but some lenders are able to support a lower loan amount given the right condition.

Since your property is closing for 90k, in theory, the appraised value of the ARV should be much higher than 100k after putting in rehab, so you should be good. However, there are seasoning requirements for both Fannie Mae and DSCR refinances, unless you opt for delayed financing.

Hi Neno,

Are you saying the seller is living in it as a primary, or are you going to live in it while rehabbing?

Private lending or leveraging relationships with local lenders may be the way to go here if it's an investment property (not primary).

Hi Sejin,

Are you calculating the rental income based on long term rental or short term rental? Orlando is a fantastic STR market from what I've heard. It sounds like you are using the property and renting it at the same time, so it depends on how negative the cash flow is and what your income situation looks like.

It might be discouraging to see negative cash flow when you look at the asking price, but it does not mean you have to offer what the seller is asking. If you are constantly coming across deals, it doesn't hurt to offer below asking price especially if it is reasonable.