All Forum Posts by: Marco Santana

My suggestion is to go long with the vendor financing. It is the best financing you can use to fund a home purchase, because you set the rate and the terms - not a bank. I bought a place a number of years ago, and the vendor carried back 100% of the purchase price - because i asked. In fact, most of my purchases have included a vendor take back mortgage of one sort or another. You can do this!

If buying a rental property, there are investor programs depending on the investor's home country. Lenders that do DSCR loans for foreign investors typically require bank documents to be translated and currency to be converted U.S. dollars. Down payment will be a minimum of 25% of purchase price and these programs are generally for 1-4 units. Minimum $100,000 loan amount.

More on DSCR loans: DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further. 

@Marco Santana

1. Yes you can refinance out as long as you qualify and meet the terms of the lender

2. Tough to answer this question, terms should meet your needs and make sure you can afford the property

Why are you wanting owner finance over conventional?

Hey Marco, 

To Jacob's point, if that's true, you will not have any issues doing a cash out refinance. 

Yes definitely . As long as its deeded as a single family on a separate parcel 

I wouldn't see an issue with this one, as long as there is a clean title should be a pretty simple process.

Hey Marco, 

Thank  you Erik,

The current zonning is: R-2(Two family district), for sure SFD

What is the current zoning of the individual unit? This will be tough to finance if we do not know if this would be considered an SFD or Condo.