Why they call it “Investor-Specific Financing”
- DSCR is the official name, but the framing matters.
- Conventional loans are still great (30-year fixed, strong rates) but:
- More hoops
- More documentation
- More friction
- Harder for business owners / complex income situations
What a DSCR loan is (and how it works)
- Debt Service Coverage Ratio underwriting focuses on the property’s ability to cover its own debt.
- Core concept:
- If rent covers (or nearly covers) the payment, it can qualify.
- Kevin gives a simple example:
- Rent $2,000 vs payment $1,800 → qualifies
- Even near 1:1 can qualify depending on lender guidelines.
Why this is a big win for business owners (and “interesting financials”)
- Many clients have complicated tax returns and multiple income streams.
- Conventional underwriting can feel burdensome—even demeaning—because of how intensely it scrutinizes personal finances.
- DSCR simplifies the borrower experience because it’s not about W-2 income and DTI.
LLC ownership + personal guarantee (the “clean structure” part)
- A major feature: buy in the name of an LLC (no post-close quitclaim dance).
- Still typically personally guaranteed.
- Kevin’s line worth clipping:
- “You’re the personal guarantor, but a personal guarantee doesn’t mean personal liability is unlimited.”
Avoiding the conventional 10-loan limit
- Conventional financing has the well-known 10-financed-property ceiling (often managed by splitting between spouses).
- DSCR loans:
- Don’t take one of those “10 slots”
- Can allow investors to scale further (20–30 properties possible, with increasing qualification standards as portfolios grow)
Rates, fees, and prepayment penalties (January 2026 reality)
- Historically DSCR carried higher rates/fees.
- But in the current market (January 2026), they note:
- DSCR rates can be similar to conventional
- Common caveat:
- DSCR loans often have a prepayment penalty
- Not a big deal for long-term holders (they’re not planning to exit in 2 years).
Will it show up on personal credit?
- Steve explains:
- With some lenders, yes; with others, no.
- Strategic Lending knows how to route borrowers based on that preference.
- On default and credit impact:
- Steve’s understanding: typically it would not report like a standard personal mortgage—because the loan is made to the LLC secured by the property—though consequences still exist.
What you need to qualify (simple but not “wild west”)
- Kevin emphasizes: this is not 2006-style “stated income” chaos.
- Typical DSCR pre-approval items discussed:
- Credit application + credit pull
- Proof of assets / bank statements
- Existing mortgage statements for financed properties
- Reserves: at least 6 months PITI beyond purchase/closing funds
The “new era” Moneyball stance: more conservative by design
- Their direction going forward:
- Push toward 30% down DSCR strategy more often
- Aim for a better ownership experience (less outside cash needed for property “messiness”)
- Key philosophical point:
- This isn’t about maximizing leverage; it’s about maximizing staying power.
- Closing CTA
- Kevin invites listeners to reach out with questions and book a call:
- dfy-realestate.com (Book Call button)
- kevin@dfy-realestate.com
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