All Forum Posts by: Nicholas Ruscio

Hi Rachel,

Sounds like you have a great opportunity on your hands. Please feel free to DM the property details and I can look into this further for you! 

Best, 

Congrats on your first post!

When lenders determine the income allowed from an income-producing property for calculating the debt-to-income (DTI) ratio, they typically consider the property's net rental income. Here's a general overview of how it works:

1. Gross Rental Income: Lenders will start by looking at the gross rental income, which is the total income generated by the property before any expenses are deducted.
2. Operating Expenses: From the gross rental income, lenders will subtract the property's operating expenses. These can include property taxes, insurance, maintenance costs, property management fees, utilities, and any other costs associated with running and maintaining the property.
3. Debt Service: The remaining amount after subtracting operating expenses is known as the Net Operating Income (NOI). Lenders will then factor in the potential or actual mortgage payment on the property (principal and interest) to calculate the debt service coverage ratio (DSCR).

The formula for calculating Debt Service Coverage Ratio (DSCR) is:

DSCR = Net Operating Income (NOI) / Total Debt Service

Total Debt Service includes the mortgage payment and any other related debt obligations.

Lenders typically have specific DSCR requirements that a property must meet in order to qualify for financing. A common minimum DSCR requirement is around 1.2, meaning the property's NOI should be at least 1.2 times the total debt service.

Regarding your concern about the refinance part of the BRRRR strategy, having a high debt-to-income ratio (DTI) can indeed impact your ability to qualify for a new loan. Lenders consider both your existing debt payments and the potential new mortgage payment when calculating your DTI.

If you're worried about your DTI being too high, you might want to explore a few options:

1. Increase Rental Income: Look for ways to increase the rental income from your properties. This could involve improving the properties, raising rents, or finding higher-quality tenants.
2. Pay Down Debt: If possible, paying down some of your existing debts could help lower your DTI.
3. Consider Other Financing Options: You might want to explore alternative lenders who have more lenient DTI requirements, or you could consider partnering with someone else to share the financial responsibility.

Remember that lender requirements and guidelines can vary, so it's important to have a conversation with potential lenders to understand their specific criteria and explore your options. If you would like further help exploring your options please send me a PM of details surrounding the property your are looking into. I would be happy to help! 

Hi Michael, 

I agree with Devin, a DSCR loan would be best. Please feel free to PM me some details about the property. (Purchase price, address, your credit score). Are you planning to purchase and flip this property or rent and hold?

Thanks, 

Hard money lending is often used for property acquisitions, renovations, and quick transactions. 

Pros of Hard Money Lending:

1. Speed and Accessibility: Hard money loans are known for their quick approval and funding process, making them suitable for time-sensitive deals where traditional financing might not be feasible.
2. Flexible Terms: Hard money lenders are often more flexible than traditional lenders when it comes to terms, repayment schedules, and collateral requirements. This can be advantageous for investors seeking tailored financing solutions.
3. Credit History Less Important: Hard money lenders primarily consider the value of the property and the potential for profit, rather than the borrower's credit history. This can benefit investors with less-than-perfect credit.
4. Property Flipping: Hard money loans are commonly used for property flipping, where investors buy distressed properties, renovate them, and sell them quickly for a profit.
5. Investment Opportunities: Investors who frequently use hard money may be able to seize attractive real estate investment opportunities that require swift action.

Cons of Hard Money Lending:

1. High Interest Rates: Hard money loans typically come with higher interest rates compared to traditional mortgages, which can increase the cost of borrowing.
2. Short Repayment Period: Hard money loans usually have short terms, often ranging from a few months to a few years, requiring borrowers to repay the loan quickly or refinance.
3. Higher Fees: Hard money loans may come with higher origination fees, closing costs, and prepayment penalties, increasing the overall cost of the loan.
4. Risk of Default: If an investor is unable to sell or refinance the property within the loan term, they may face challenges in repaying the loan, potentially leading to foreclosure.
   
   If you ever have any properties in mind for a client please provide me information and I can help draft up a monthly payment. 

Hi Joshua

What an amazing opportunity to propel your business. Would you need to put any further work into the property? 

I recommend pursuing a standard mixed used DSCR loan , -30-year Fixed Rate

Assuming the property purchase price is $500,000 you could expect to receive $400,000 with a rate as low as 8.5% depending on your credit score. 

Please feel free to reach out if you would like further help with this. 

Thanks, 

Hi Phil, 

Many times the money used in a cash out refi can be used to offset the rate. Please reach out if you would like to discuss further. 

Thanks, 

Hi Rufino, 

Getting a loan as a first time flipper can be challenging. Do you have a specific property in mind? If so, please feel free to reach out with more details. (Purchase price, available down payment, renovation value). Id love to help! 

Thanks, 

Hi Joshua, 

Whenever taking on a fix and flip it is important to have an exit strategy. Depending on the lender you may be able to locate rates as low as 10.5% then refinance after seasoning (12 months). Do you have a property in mind? How much down payment would you be willing to allocate? 

Please do not hesitate to reach out.
Thanks, 

Hi Sam, 

Congratulations on the start of your journey to financial freedom. Assuming you are going to invest in rental properties, a standard DSCR loan may be the best start for you. Since you a new investor this type of loan will give you the biggest bang for your buck.

Please feel free to reach out if you have a specific property in mind I can can provide more guidance on. 

Thanks, 

Hey Steve, 

Ground up construction, and mixed use property loans are our specialty. You should expect rates as low as 10.5% with 80% LTV with 100% renovations depending on your experience.

Do you have an exit strategy for this property? Looking to fix and flip or refinance?

Please feel free to reach out. 
Thanks,