Bridge, Rental and Build
DSCR Refinances After Hard Money
Short-term capital is a timing tool. This guide covers one of the timings.
Bridge, Rental and Build
The short version, then the substance.
Key Takeaways
- What DSCR means
- Why the pairing works
- Hitting the ratio
What DSCR means. Debt service coverage ratio: the property's rent divided by its loan payment. A DSCR lender qualifies the property's income instead of yours, which makes it the natural long-term home for investor rentals.
Why the pairing works. Hard money buys and fixes the property that no DSCR lender would touch, then the stabilized rental with market rent is exactly what DSCR lenders want. The two products are the entry and exit of the same strategy.
Hitting the ratio. Most DSCR programs want the rent to cover the payment with room to spare. Underwrite your refinance at conservative rent and today's rates before you buy. If the ratio only works with optimistic numbers, buy a better deal.
The South Texas angle. Averlend underwrites this every week in Corpus Christi and across Nueces County. If you are working a deal in downtown or anywhere else in the metro, the theory above comes with a local desk attached: see our Corpus Christi lending page or send the deal directly.
Questions
Quick answers from the Averlend desk.
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