All Forum Posts by: Robin Simon

Quote from @Davon Broadwater:

Quote from @Robin Simon:

Quote from @Davon Broadwater:

Hello,

I am thinking about using a DSCR loan for my first rental property, and I know a Conventional loan cannot be used on distressed properties. I have an investor- friendly agent that have homes (not distressed) that isn't on the MLS. Can I use a DSCR loan for these homes?

Generally is going to be OK the only issue is that it can be challenging to confirm the transaction is truly arms-length on an off-market deal and I believe all DSCR Lenders do require Arms-Length transactions. If everything is above board and can be pretty well documented its likely workable for at least us (but I'd imagine same with a good amount of DSCR Lenders)

Can you explain more on Arms-length transactions?

 When there is no realtor involved, it could be fine, but it could be disguising the fact that there would be fraud going on or that the purchase price doesn't equal market value (i.e. two related people selling a property one to another at an inflated value, etc.)

Welcome to BP!

Quote from @Davon Broadwater:

Hello,

I am thinking about using a DSCR loan for my first rental property, and I know a Conventional loan cannot be used on distressed properties. I have an investor- friendly agent that have homes (not distressed) that isn't on the MLS. Can I use a DSCR loan for these homes?

Generally is going to be OK the only issue is that it can be challenging to confirm the transaction is truly arms-length on an off-market deal and I believe all DSCR Lenders do require Arms-Length transactions. If everything is above board and can be pretty well documented its likely workable for at least us (but I'd imagine same with a good amount of DSCR Lenders)

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Quote from @Ismael Ayala Jr.:

This maybe a silly question but I feel you got to put yourself out there and not be afraid to ask questions and admit your limitations. I'm new to real estate(just started renting out my rental property last fall). I understand real estate to be capital intensive. However, I'm looking at creative ways to produce cash flow with little to no cash down. The question is:

I have >$100,000 of equity in my (1st SFH) rental property. I currently live in my primary residence (2nd SFH). Will a DSCR lender give me a home equity loan from my (1st SFH) rental property, so that I can cover the down payment + closing costs to assume the 2.75% interest rate on a (3rd SFH) property I would move into immediately? As I would have to move in at least for a year to assume that rate. I would then just rent out my current (2nd SFH). The goal would be to capture that interest rate and keep it for the next 25 years so that I can cash flow well, if I move again and rent it out. And then payoff the home equity loan about less than $60,000 within 2-3 years.

Thx.

DSCR Loans are going to be strictly business-purpose 1st lien loans - so something like this with a closed end second or HELOC is going to be a different product entirely. Your situation is probably better for seeking out "Non-QM Lenders" or potentially other "Creative Financing" options

Quote from @Jacob Sherman:

Quote from @Robin Simon:

Quote from @Jacob Sherman:

yes absolutely ! can utilize the no income no doc DSCR loan which works beautifully and can take upto 80%

Really think we should stop using "no doc" to describe DSCR Loans - really isn't accurate and adds unneeded stigma around the loan product

What types of "docs" do you require for a DSCR loan at easy street ? For DSCR we only require LLC docs if in an LLC , drivers license, SS Card if available if not ss89 can be signed, we don't ask for any info on any other properties owned by the borrower, we dont source or require seasoning on funds. Its a no income no doc. No lease agreement if vacant. We concentrate on the subject property and the subject property only

I mean you start still listing documents - sure, vacant means no lease but plenty of DSCR Loans require leases / STR history. Property Insurance? Appraisal? CDA? Credit Report? Renovation docs on short-seasoned cash-outs?

Plenty of Docs required on a DSCR Loan

https://www.biggerpockets.com/blog/what-documents-do-you-nee...

Quote from @Dominic Richardson:

Quote from @Robin Simon:

Probably need more information, especially regarding type of real estate investment because its going to definitely differ dramatically, some thoughts:

-If its for a rehab "Fix and flip" - definitely more about value, experience, timeline

-You are mentioning more about rental property metrics - if so, is this SFR or small residential or commercial? Cap Rates really don't apply to residential so drivers are going to be much more about credit and value - if commercial, its a whole different thing - more about cap rate cash flow metrics etc

To be more specific; long hold multi-family rental properties (duplex, triplex or fourplex).

What COC% would one be looking for? 10%, 20% .. I get the higher the better.

 Cash on Cash as a lender (you) or the investor's cash on cash in underwriting them?

Quote from @Frank Ventresca:

@Robin Simon im afraid im losing out on potential equity on my property with another product that is not IO. Is that accurate thinking?

 I'm not sure I'm understanding - you really don't "lose" out on any potential equity by not paying down principal - the general question should be about your best alternative use of your capital (opportunity cost) - that would otherwise be in your pocket/investable 

what specifically is worrying you about the IO?