Are you a real estate investor looking to acquire a DSCR investment property loan? Helpful.
While traditional mortgages require tax forms during the loan approval process, DSCR investment property loans do not.
When providing tax returns, it is not always an accurate depiction of true cash flow due to traditional loan underwriting practices (often default vacancy rates, lowest global debt repayments, and other guidelines and overlays apply). For real estate investors and others whose tax returns do not accurately portray their financial situation, tax return-free investment property loans are a powerful financing solution. If the rental property has positive cash flow, it is sufficient qualifying income.
Another powerful tool for real estate investors is the BRRRR Real Estate Strategy. buy Bad investment property. in rehabilitation properties. rental properties. refinancing Properties withdrawing cash to buy more investment properties repeat process again. Done right, this method can skyrocket your passive income and grow your real estate schedule at a tremendous rate.
If you want to learn more about DSCR investment real estate loans and BRRRR real estate strategies, check out the information below.
What is a DSCR investment property?
DSCR investment property loans, sometimes called “investment property loans” or “rental loans,” do not take into account the borrower’s income in the traditional sense.
“Cash flow” is the monthly rent that the property generates. For example, a property rented for $2,000 per month would be considered qualifying income at $2,000 per month. The main requirement for these investment property loans is that your monthly rent covers your monthly expenses. It’s that simple.
Not only is the borrower’s income not considered in the loan application process, nor are investment property lenders asking for an income amount. In fact, there is no proof of income of any kind. No letter from employer, no W2, no payslip. Again, investment property income is simply the property’s cash flow.
Why Use DSCR Investment Property Loans?
Traditional mortgage lenders require tax returns, W-2s, and payslips to determine your monthly income. Salaried workers and hourly borrowers are required to look at their gross income for eligible purposes by the lender. But for self-employed borrowers, traditional mortgage lenders look at net income and adjusted gross income appears on tax returns. This puts property investors and other self-employed borrowers at a disadvantage.
However, rental loans are a great way for property investors to qualify for both acquisitions and refinancings without needing bank statements or tax returns and using debt-to-income ratios to qualify. is. (Bank statement loans are also a great option for self-employed borrowers. Click here for more information on bank statement loans.)
Borrowers who deviate from traditional underwriting guidelines but are looking for long-term loans with more attractive interest rates than hard money loans can take advantage of DSCR investment property loans. These loans do not require tax returns, income or employment, or debt-to-income ratio calculations.
DSCR loans offer flexibility and fewer paperwork for hard money loans, but rates are closer to traditional loans.
This is an ever-evolving area of real estate financing that offers powerful ways to grow your real estate portfolio.
What is BRRRR Real Estate Strategy?
BRRRRMore (purchase, rehab, rent, refinance, repeat) A real estate strategy is a real estate investment strategy that involves buying distressed properties, refurbishing properties, and renting them out to cover mortgages. Then cash out the property refinancing and use the profits to fund further rental property investments. Buying bad properties at discounted prices is the key to making a profit with the BRRRR strategy.
B is for purchase
Investors using this method should not only buy older properties. It’s important to make sure you’re making a sound investment and that it’s a good deal. You should do your research and have a good timeline for how long the renovation will take and when the property will be available for rent. Finding a distressed property to buy is easy. The difficult part is fundraising. Valor Lending Group has over 100 lenders that specifically finance investments in bridge, fix and flip, DSCR and construction loans. Valor Lending Group can find the right lender for your property regardless of its level of rehabilitation.
R is for rehab
Property repair is the most time consuming stage of the BRRRR method. Making sure it’s safe, livable, and meets the standards of the rental market in your area is very important. Depending on your location and market rents, you should consider what level of upgrade your property needs. You would never want to renovate a property that is below or above a certain area.
If you use the BRRRR method, you should be clear about the extent of work that needs to be done on the property and how much it will cost to prepare for the move. If you don’t plan your attack in terms of time and cost, you can lose money.
The main aspect you should focus on to get the most return on your investment is updating your kitchen and bathroom. Also make sure there are no dangers.
R is for rental
Renting newly refurbished properties to new tenants is one of the most important stages of BRRRR real estate strategy. This will lock in your passive income and allow you to continue with the BRRRR method. Many investment property loans are based strictly on monthly gross rent and ability to cover principal, interest, taxes and insurance premiums. Getting the best and highest rental income will be a key factor in the BRRRR equation.
R is for refinancing
Refinancing of newly refurbished properties is very important. This will give her access to equity to buy more properties and build her SREO. The most common investment property loan is the DSCR loan. DSCR stands for Debt Service Coverage Ratio. Ability to generate enough rent to fully cover PITI payments. The higher the ratio, the easier it is for the entity or individual to finance the investment property. DSCR is gross rent divided by his new PITI (principal, interest, tax and insurance) monthly payments. Your Property Debt Service if your property collects rent that covers current PITI payments. This program is great for investors as there are no taxes or income.
R is REPEAT
Repetition is the final stage of the BRRRR method. Repeat stages to maximize your real estate assets. When iterating, always take notes during the process so you know what worked and what didn’t in the next round of the BRRRR method.
Whether you are an avid real estate investor or buying your first investment property, the BRRRR method can be used to your advantage.
Conclusion
A DSCR investment property loan is a viable long-term financing solution for real estate investors and a great way to get out of trouble. Reduced documentation and underwriting requirements are similar to hard money loans, but interest rates and fees are similar to traditional loans.
While traditional mortgages require tax forms during the loan approval process, investment real estate loans do not. These loans allow real estate investors to buy or refinance real estate without the need for employment, without considering personal income, and without incurring a debt-to-income ratio.
The only cash flow that matters is rental income. that’s it. If the property debt is repaid, the property qualifies.
The BRRRR real estate strategy is a profitable method for real estate investors. Whether you are an avid real estate investor or buying your first investment property, the BRRRR method can be used to your advantage.
VALOR LENDING GROUP OFFERS EVERY Mortgage ON THE BOOK!
If you would like to discuss the details of your eligibility and requirements, we are happy to answer your questions.
Loan product summary:
- Hard Money Loans (20% Down / Minimal Documents) Funds are typically provided in 7-10 days.
- Income proof loan (recommended for business owners and self-employed people) No tax return required!
- 100% fundable (with sufficient equity, other properties can be cross-collateralized)
- Valor VA Mortgage 100% Financing up to $1.5 Million
- DSCR | Investor Cash Flow Loans – No tax returns or DTI calculation required.Target property cash flow basis
- Flipper & Rehab Loans
- Second position loan up to $5mm
- Raw Land and Lot Loans
- Foundation work for specification houses, custom-built houses, and commercial facilities
- Farms, Vineyards, Ranches, Farmlands (25-30% down)
- 10% down jumbo without MI up to $2M
- Manufactured Homes / Mobile Homes (20% Down / 600+ Credit Score)
- area characteristics
- Commercial loans up to $500 million
- 3% & 5% Down Traditional Loans – LPMI (Lender Paid Mortgage Insurance)
- Foreign loan (no social security or residence required)
We also offer:
- 10, 15, 20, 25, 30 year fixed and conventional conforming loans
- High Balance Conforming aka Super Conforming
- $20M from Jumbo / Super low price! / Jumbo down 10% to $1.5M
- FHA, USDA
- Arms
- Up to $3 million worth of reverse mortgages
- Refinancing including cash out
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