All Forum Posts by: Luther Epperhart

You need to use a lender like Visio that will use STR numbers. I did 3 cashout refi's with them on STR's and they literally use AirDNA, so use that for your numbers.

They will give you all the info you need.... based on the rental rates and ARV they will give you options for rates, points and % down.

For example they might require 30% to make the math work, the lowest they have gone for me is 25%. 

I highly recommend them. 

 Hey Luther,

Some options allow up to 80-85% of Market short-term rental income to be justified to back DSCR. Like others have said, you may run into some issues getting max 75% cash-out if the property is considered rural.

Seasoning should not be a concern as you have owned the property for more than 6 months, but this is worth considering since many products do have a strict 6-month requirement.

The non-QM market is constantly changing, and DSCR loans are a part of this non-QM category. A few months back, some (but not all) of my investors eliminated the cash-out seasoning requirements for DSCR. Those without seasoning for cash-out are utilizing LTR, and at 65%, no ratio is mandated. I understand this doesn't reach the 75% mark, but it's worth noting that this product is newly available and gaining traction. I anticipate that the no-seasoning DSCR will soon accommodate STR. However, I'm concerned that this change might not be timely enough for your immediate needs.

Luther,

I have done several in the Smokies pulling cashout when closing on permanent financing. You will have alot more options if you have rentals already for a year or 2. There are several lenders who will go off of STR income instead of LTR. Expect to see DSCR rates of 9% to 12%.

A word of warning.  The payment at 75% cashout with these rates may not cashflow.  I personally will not pull cashout when my 2 current builds finish up.  It is too risky with these rates, in this economy and with the uncertainty of world affairs. I would rather have to sell one to free up cash.  

Hey Luther, 

The property will need to season 6 months to refinance at max ltv based on current value. There are DSCR loans that can either use AirDNA or order an appraisal based on STR, that won't be a problem. What you'll want to focus on is finding an lender/institution who is okay rural location and if so at what LTV. In my experience many lenders will cap out around 65% LTV.

 Hey Luther, 

When it comes to STR's most DSCR lenders will require 6 months title seasoning to cash out on the appraised value. A handful will do 90 days as long as you can show you have completed significant renovations.

There is no seasoning requirement on a rate and term refinance. (No cash out, just payoff the hard money loan)

Some lenders will go up to 75% LTV, but majority will be at 70% LTV. Also there is a couple of options that allow you to finance fees onto the loan amount if you are tight on the cash to close.

Many lenders will require a short term market rent appraisal and some will only use 75% of the rents, others will not. Additionally most lenders will require that you have managed an STR in the past 12 months, or show that the property has 12 months of short term rental income. A couple do not have this requirement.

Hello Luther,

How long have you owned this property/applied for the hard money loan? What is the  Fair Market Rent, Taxes/Yr, Insurance/Yr for your property?

If you would like to get on a phone call to discuss the best course of action. Feel free to send a direct message to me.

Thank you 

Chris C.