Feel like a lot of deals that cash flow still end up getting pushed through traditional loans, even when the numbers make more sense looking at the property itself instead of personal income.
Not sure if it’s just lack of awareness, pricing, or something else, but it seems like a lot of people don’t even consider it
At what point does financing start slowing people down, not the deal itself, just getting approved
Feels like most people can get their first one or two done, but after that things start getting tighter even if the deals still make sense. Curious where that started happening for people
You can get denied for a deal that cash flows, not because the deal is bad, but because of how it’s being underwritten.
Most lenders are still looking at your personal income and total debt, even if the property covers itself, so on paper it can look like you’re losing money, even when you’re not
Then you see someone else buy a similar property and get approved. Same type of deal, but different loan structure. Some loans are based on your personal income, others are based on whether the property can support itself. That’s usually where DSCR fits in
The bank is not looking at your rental property from the same perspective as you. You are looking at it as an asset, but the bank is going to treat it as a liability until it has been proven otherwise on paper.
Even if your monthly rent can cover your mortgage, some lenders will still discount, average, or even disregard your monthly income.
At the same time, they count 100% of the debt against you. That’s how you end up in a situation where you own multiple properties that all make money, but on paper you look over-leveraged
This is usually where people hit a brick wall. First couple deals go through fine, then all of a sudden approvals get harder or you start getting denied. At that point it’s not about finding a better deal, it’s about understanding how the lender is actually evaluating you.