DSCR Loans: The Shocking Truth About Qualifying Without Income—and Why It Could Make or Break Your Next Investment Deal
Tony:
Can I please have the BP community’s thoughts on this? Is A-D-S-C-R loan worth it or does it depend on my strategy? I hate that my money will be stuck in the property though. Hoping to get some insight. So I think first let’s just define what is A-D-S-C-R loan? So A-D-S-C-R loan stands for debt service coverage ratio. So basically the bank is looking at how much revenue does the property generate and is that revenue enough to cover the debt service AKA, the mortgage? I believe this originated in commercial real estate, or at least that’s where it’s super prevalent because if someone goes out and buys a $100 million apartment complex, one person’s not going to cover that mortgage. So the bank is looking at the property itself to gauge can the property itself generate enough revenue to cover a $100 million purchase, a $100 million mortgage? And we’ve seen this DSCR loan make its way into single family investing as well. So that’s what A-D-S-C-R loan is. It’s looking at the property, not so much the individual to gauge whether or not it can cover the mortgage. So Ash, what are your thoughts? Do you think that DSCR loans make sense for rookie investors or are they too complex? What would your initial take?
Post Comment