Case Study: Finding the Right DSCR Solution for a Foreign National Investor
The Scenario
A foreign national investor was purchasing a single family rental property through an LLC and needed DSCR financing.
Loan Details
Purchase Price: $500,000
Loan Amount: $350,000
LTV: 70%
Interest Rate: 6.375%
Property Type: Single Family Rental
Occupancy: Long Term Rental
Borrower: Foreign National
Entity: LLC
Timeline: Closed 19 days from loan approval
The Challenge
Everything was moving smoothly until the appraisal came back with lower than expected long term market rents. The reduced rental income pushed the DSCR below the lender's minimum requirement of 1.00, putting the transaction at risk.
At that point, we evaluated every available option instead of forcing the borrower into the first solution.
The Options
The first option was to order a short term rental analysis. While this would have increased the qualifying rental income, it also came with additional costs and less favorable loan pricing.
The second option was for the borrower to buy down the interest rate. Lowering the rate reduced the monthly payment enough to bring the DSCR above 1.00 while also providing a long term benefit through lower monthly payments.
After reviewing both scenarios, the borrower chose to buy down the rate because it made the most financial sense for their investment strategy.
The Result
The loan closed successfully in just 19 days from approval.
Instead of paying for an additional short term rental analysis and accepting higher loan pricing, the borrower secured a lower interest rate, achieved the required DSCR, and reduced their monthly payment for the life of the loan.
At Bear VII Equities, we don't believe there's only one way to structure a deal. Every investment is different, which is why we analyze multiple financing strategies and present our clients with the options that make the most business sense. Our job is to help investors make informed decisions, not simply get a loan approved.
Need DSCR financing for your next investment property?
Or feel free to reach out directly:
Email: nick@bearviiequities.com
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