DSCR loans, or Debt Service Coverage Ratio loans, are a type of financing option for real estate investors. When considering whether to provide a DSCR loan, lenders will take into account the expected rental income of the property in question. If the property is currently vacant, a rental survey will be conducted to determine the expected rental income, which will be used in the DSCR calculations.
There are different approaches that DSCR lenders may take when it comes to determining the expected rental income of a property. Some lenders may use the income from short-term rentals, such as those booked through Airbnb, while others may rely on a long-term rental survey. The approach that is taken may depend on the specific lender and the property in question.
It's worth noting that securing a DSCR loan for a property in a very rural area may be difficult, as many lenders are hesitant to lend in these types of markets. If you're considering applying for a DSCR loan for a property in a rural area, it's important to be aware of this potential challenge.
If you're a real estate investor looking for guidance on how to finance your investments, you may be interested in a free strategy call with Beau Eckstein, the host of the Investor Financing Podcast. Eckstein has over 20 years of experience in the lending industry and is offering a free strategy call to help investors come up with a finance plan to achieve their investing goals. Whether you have a portfolio of 30 properties or you're just starting out with your first property, Eckstein's framework can help you grow your real estate business.
Book a call with Beau here.
If you're interested in booking a call with Eckstein, you can do so through the link provided above.
He will run the numbers based on your expected gross annual income from short-term and long-term rentals and advise you on the best pricing and lending options available to you. It's as simple as that!
In summary, DSCR loans are a financing option for real estate investors that take into account the expected rental income of a property. The approach taken by lenders may vary, with some using short-term rental income and others using a long-term rental survey. Securing a DSCR loan for a property in a rural area may be challenging, but Bo Eckstein is offering a free strategy call to help real estate investors come up with a finance plan to achieve their investing goals. If you're interested, you can book a call or fill out a form to get started.