Currently, I am paying $942/month w/ $232 of that going towards my principal.

What are the drawbacks to something like that?

There are drawbacks however, and it certainly isn't cash as multiple draws, estimates, and appraisals are required throughout every step of the process. 

Things have changed over the last few years so do not be afraid to ask questions before you apply any learned principals.

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).

This allows you to ladder investments if you're saving up for a big deposit or if you just want the option every few months to extract principal or reinvest. 

For those curious, if this applies to them, just follow these general principals: To qualify for the Section 121 exclusion you must: Must live in the home in the past 2 of the 5 years 24 months non consecutive required Must have owned the home for at least 2 years Only one spouse needs to meet the ownership testBoth spouses need to meet the use test Neither spouse has excluded a gain / used section 121 in the past two years Must file jointly for the 500k exclusion

. $100k performing I/O note for $90k), how do you classify the extra principal you get back when the loan matures?

In the meantime, I use my W2 income to pay the HELOC minimum and try to through  between $500-1000/month toward the principal to pay it down. my point is you have to pay some how and if the hello is your only option to get in the game then I say go for it.Good Luck!

Hi all - any remaining funds from Reno loans go towards principal curtailment.