Are you looking for a loan that fits your real estate investment needs? A DSCR loan might be the perfect solution. Whether you’re just starting out or have hit a roadblock with traditional lenders, this loan focuses on the property’s income rather than your personal finances. Let’s explore 10 ways a DSCR loan can be good for your deals!
1. Helps When Your Income Is Low
If your income over the last two years is too low to qualify for a conventional loan or a loan from your local bank, a DSCR loan is a great option. It doesn’t rely on your personal income. Instead, it focuses on the property’s rental income.
2. Works for New Businesses
Just started your business? No problem! A DSCR loan doesn’t require two years of business history. Even if you’ve been in business for just one day, you can qualify. DSCR lenders don’t care when you started or how long you’ve been in business.
3. No Worries If You’ve Changed Jobs or Moved
Have you recently changed jobs or moved? Conventional lenders might see this as a red flag, but not with a DSCR loan. This type of loan doesn’t care about your job history or recent moves, making it easier to get financing.
4. Perfect for New Investors
If you’re just starting as a real estate investor, you might not have the experience conventional lenders look for. But DSCR loans are ideal for new investors because they don’t require a history of investing.
5. Focuses on Positive Cash Flow
For the best rates and terms, your property needs to cash flow positively. DSCR loans are designed to reward properties that generate strong cash flow. The more your property earns, the better the deal you’ll get.
6. A Solution When You Have 10+ Properties
If you’ve reached the limit of 10 conventional loans, it’s time to consider a DSCR loan. These loans don’t have the same restrictions and still offer 30-year fixed-rate options.
7. Rewards High Credit Scores
While DSCR loans are available to those with lower credit scores, the best deals go to those with higher scores. A strong credit score can secure better rates and terms.
8. Ideal for Long-Term Holds
If you plan to hold onto your property for at least three to five years, a DSCR loan is a smart choice. However, be mindful of prepayment penalties if you decide to sell or refinance within that period.
9. Best for Turn-key Properties
DSCR loans work best with properties that are ready to rent and require no additional work. They’re not suitable for flips, as they don’t provide funds for repairs and often come with prepayment penalties.
10. Offers Interest-Only Payments
If you’re looking to improve cash flow, DSCR loans can offer interest-only payments. This option isn’t available with conventional loans, making DSCR loans a great way to manage your finances while your property appreciates.
Is a DSCR Loan right for you?
In the world of real estate investing, finding the right financing is key. A DSCR loan offers flexibility, especially when your personal finances don’t meet conventional standards. By focusing on the property’s income, this loan opens doors for both new and experienced investors. Consider the 10 ways a DSCR loan can be good for your deals as you move forward in your real estate investment journey!