All Forum Posts by: Shawn Krieger

85% on a Single-Family is possible, but on a motel is going to be tough. 

The lowest I've seen is 15% down for a single family rental with 720 credit or above for your middle mortgage FICO score with a 1.2 DSCR ratio. I've never seen a DSCR lender do 100% financing on a purchase.

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.

There are factors that really weigh into the rate including the length of the prepayment penalty and the LTV.

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

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

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 as far what factors the lender uses to underwrite the loan? Is your DSCR ratio greater than 1-meaning are you cash flowing when comparing the actual or projected monthly rent against the monthly mortgage, property taxes, 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.

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.

I’m a real estate agent in Jacksonville, Fl  and I’m looking for a landlord  who will rent a 4/2 single family home to a group business, for a 5 year lease with annual 3% increases.  I guest I’m reaching out to find out if this is asking too much of a residential landlord. Any advice would be appreciated.

@Paul Klei I would be interested in learning more about these opportunities to see if we can help. We work with a vast network of private/hard money lenders who are reliable and thoroughly vetted. Let me know if we can set up a call soon to discuss.