All Forum Posts by: Stacy Raskin

@Adriel Paradise, since there different loan program options, what price ranges are you buying in for properties, what's usually your average budget for rehab and what states are you doing flips in? 

@Tricia Holway, I work with lenders that do HELOCs and 2nd mortgages on investment properties. I'll send you a message as well. 

DSCR lenders will either take a 100% of your net income on your income on your Schedule E or your tax return (so this is where they will consider your property expenses) or they will take your current lease with a 75% vacancy rate. So (for easy math), if your current lease is $1000, the lender will take $750 as cash flow.

Also, some lenders will use market rents provided by the appraiser so you can buy an unoccupied property and still get a DSCR loan. DSCR loans usually have a minimum loan amount of $100-150K depending on the lenders I work with.

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. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. 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 = $250Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. 

I work with lenders that do HELOCs and fixed 2nd mortgages on investment properties. 

@Alfred Litton, 

1. Yes, 75% LTV is possible depending on the lender. Some lenders are tightening up their lender standards now. I work with lenders who do 75% cash out depending on credit score. Generally 700+ credit scores will get you best cash out options with the lenders I work with.

2. Some lenders will use your cash out proceeds as reserves so no reserves are needed for DSCR loans.

3. Rates and points depend largely on LTV, credit score and whether you're cash flowing. More on that below.

4. Loans are closing anywhere from 2.5-4 weeks depending on how quickly the appraisal comes back and who you are working with. Generally banks move more slowly than brokers as they have more red tape to contend with. They are also more conservative with the underwriting and credit standards and you will hear "no" more often from them. 
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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. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. 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 = $250Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. I'll send you a message as well.

@Kenneth Bentley, what is the mortgage balance and what would you estimate the value of the rental property to be? These are major factors that lenders will consider as to whether they can do the loan besides your credit score. 

@Taylor Wisnewski, yes based on your situation, I think DSCR loans would be the best way to go. Most DSCR lenders have a minimum loan balance of $100-150K.

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. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. 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 = $250Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. 

@Juan David Maldonado, do you currently own your own home or what kind of markets are you looking to buy in? 

@Benjamin L., I'm a mortgage broker that works with multiple HELOC lenders. I'll send you a message as well.

Where are your properties located?