If it's a light doc DSCR lender for 1-10 Unit properties, they will look at monthly taxes, insurance, interest and principal payments as expenses and will not factor vacancies, PM fees, and other expenses.

Depends on market conditions, interest rates, etc.Step 4:  Pay back the principal you originally took out on your SBLOC, bringing your leverage balance on your portfolio back to 0.Step 5:  Repeat.Opinions? 

If you are concerned about protecting principal and the next downturn hits, you will want to confine yourself to these types of loans.

(Note this simple calculation doesn’t include additional principal paydown at lower interest rates)

The payment on a $1,200,000 property with 20% down, which is putting $240,000 down, means the payment, without taxes and insurance at 8% is $7,044 per month for Principal & Interest, and you would have to make about $256,000 annually (instead of $60,000) to qualify. 

When you reach retirement, you’ll start drawing down from that pile, and you definitely don’t want to touch the principal.

In the first case the money woud go into your LLCs basis in the property in the second case it is principal of a loan and not deductible in any way.

Many lenders, including my group, offer a DSCR product to refinance on the back end as well.Before taking out a loan for a BRRRR project be sure to calculate all carrying costs (taxes, insurance, utilities, HOA, loan interest, etc.) to ensure (i) you have sufficient cash to cover monthly payments for at least the duration of the project and (ii) your estimated rent after repairs is at least 1.10x PITI (monthly refinance loan payment principal and interest, taxes and insurance).We have a proprietary BRRRR cash flow calculator tool that we share with our clients to help reliably assess costs and returns for these types of projects.

Deal structure is very important so that you have enough equity protection to secure your principal loan amount.

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).