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New Apartment Building Financing

ForCredit Challenged Investors.

Blanket Loan Features

blanket-loan-benefitsUnderstanding The Benefits of New Blanket Loans Features

New Rental Home Financing programs offer real estate investors incredible access to attractive blanket mortgage financing for growing and optimizing the performance of their portfolios.

There can be many advantages to these new investor property loan programs, but some of the terminology and features of these ‘Buy to Rent’ mortgages may be new to many.

So what do they mean and how do they help?

4 common terms and features of new Buy to Rent loans:

  • DSCR

There has never been a better time to expand income property DSCR or Debt-Service Coverage Ratio is a term commonly used in commercial real estate financing. It is effectively the same as the Debt-to-Income (DTI) ratios most investors are probably familiar with when buying residential homes and borrowing from local banks. In this scenario, commercial lenders use this expression to determine the DTI ratio of an individual or pool of properties to determine maximum new debt, based upon the income derived from the property being used as collateral. A DSCR of less than 1 would mean the property would be negative cash flow. The standard minimum DSCR required by lenders is traditionally 1.25.

  • Non-Recourse

Non-recourse loans are prized by intelligent investors. It means individuals will not be pursued personally in case of default on a loan. The property would still be subject to foreclosure. It is now standard for lenders to add exceptions to this in cases of fraud or other actions of owners which may be deemed to have deliberately caused the default.

  • Cross Collateralized

This new breed of loans provides extended rental home financing in one mortgage loan collateralized by multiple single-family rental homes. This can range anywhere from 5 units to thousands of units. This provides simplification and streamlined lending, reduced borrowing costs, maximized returns, and helps free up captive capital, and enables efficiency in making new acquisitions. For example; an investor with 10, $100,000 homes could theoretically leverage $700,000 in one 70% LTV loan by providing a first mortgage secured by these properties.

  • Capital Expenditures Reserve Accounts

Some new lenders and loan programs establish Capital Expenditure Reserve Accounts on behalf of their clients. This has been a very controversial and misunderstood factor of loans to date. Reserves have long been a factor in credit approval, especially for commercial and investment properties. Lenders would rather loan more and see a borrower has a cash reserve to service debt in emergency situations. Experienced rental property investors also know that at some point during their stint as a landlord repair and replacement demands will arise. Appliances, siding and even roofs only have a finite lifespan. In order to keep properties performing these items need to be budgeted for, with some money put aside each month to bulk up for when these needs arise, without suffering cash shortages. This is definitely a sign of a lender dedicated to sustainable practices, and who also has the investor’s interest in mind.

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Read 16844 times Last modified on Wednesday, 22 December 2021 02:10

Rental Home Financing
9465 Counselors Way
Suite #200,
Indianapolis, IN 46240

 

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About Rental Home Financing:

Rental Home Financing, as the best mortgage lenders we originate rental home loan products and cash out refinance investment property loans as the best investment property refinance lenders. Commercial blanket loans are available with a commercial purpose to suit your needs.

Also, as DSCR loan specialists, we are currently authorized to make such loans in most all areas of the United States. Specific circumstances will determine whether we have the ability approve/close portfolio rental home loans in your state(s). When you are ready to get a mortgage for rental property, we are ready to serve you.

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