The interest rate is 7%, so we suggest this property is for someone who wants to get into Lease Options and meets the other requirements such as adequate reserves and credit.That means, they buy the property, they wind up with $50,000 in equity and they do a Lease Option to a buyer who doesn't currently own a house, but wants to.

Market UpdateFor the second time in as many months, the Federal Reserve is on deck this Wednesday with a decision on whether to cut the Federal Funds Rate.

Bottom line sub too is an advanced strategy that should only be done by Experienced investor with significant cash reserves or access to lending/like substantial LOC that already exist and can be taped at a moments notice. 

If OP can lever-up while maintaining adequate reserves, he will be in better position than buying with heavy cash position.  

Unfortunately, while there are other methods to acquire investment properties, the reality is you need cash and reserves to plan and set up your investment portfolio accordingly. 

We had been expecting that money to replenish our reserves and so we were somewhat distressed that not only would we not be getting our funds, it was happening at a time when we really needed the money!

If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.DSCR lenders generally let you vest either individually or as an LLC.

-Interest rate of 5% is much lower than market interest rates. 7-8%+-There are no capex reserve considerations included. 5% is a starting point.

If is 65% and below LTV you won't need to provide reserves. 1.

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 < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable).