Plus, it takes several years to break even on the closing cost and first few years of payments are mainly applied toward the interest and less to the principal.

Those numbers do not seem correct, unless you are using terms like loan amount of $104,000 is the unpaid principal balance (which is the amount that accrues interest), and the $270,000 is the total payoff.There are two components to a mortgage statement - the first is the reinstatement amount - this is the amount to bring the loan current.

And it doesn't really cost the taxpayers as much money as they're putting out because the principal is getting returned to the taxpayer when that buyer sells the home.What I really like is that its only for first time home buyers and only for new construction. 

You are still getting principal paydown and appreciation on your investment so coc is not your true return. 

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).

Historically speaking, STRs will at least allow you to cash flow right out of the gate and when you add in the appreciation and principal paydown and tax benefits, the returns are 40% a year or better on most of these deals. 

The monthly payment for Lender 1 would be $1680 and the monthly principal and interest payment for Lender 2 would be $1398. 

If you end up paying a preferred rate that is too high, your preferred equity investors will be very happy but your common equity investors could not only lose out on returns but even lose principal because most preferred equity deals have the preferred equity investors receiving all their return on capital and all their return of capital before the common equity investors get anything.I have done deals where all the investors were structured as preferred equity with a specific stated return and no upside beyond that return. 

Principal Place of Business: The home office must be your principal place of business.3.

That means 20% of the loan to the lesser valued houses (3) and 40% to the higher priced home (1) for a total of 100%.When you sell one of the houses, you typically have to pay 110 to 120% of the allocation loan percentage based on current principal.