Investors interested in owning multiple rental properties may find it difficult to locate and manage multiple capital sources for their various properties. While navigating the evolving regulatory challenges in the real estate rental market is arduous enough for today’s investors, managing multiple financing streams can tack on additional approval timelines, logistical servicing headaches, and confounding requirements. Granted, these setbacks are well-worth the long-term benefits and recurring, passive income generated from these properties.
Long-term DSCR portfolio loans or rental portfolio loans aim to eliminate many of the challenges rental investors face while looking to mortgage multiple properties. Below, we’ll define DSCR loans, explain the benefits of long-term rental portfolio loans, and tell you how the right private lender can help investors with multiple rental properties scale their business.
Long-term DSCR portfolio loans or rental portfolio loans aim to eliminate many of the challenges rental investors face while looking to mortgage multiple properties. Below, we’ll define DSCR loans, explain the benefits of long-term rental portfolio loans, and tell you how the right private lender can help investors with multiple rental properties scale their business.
Understanding DSCR Loans
Before diving into DSCR portfolio loans for owning multiple properties, it’s important to understand a DSCR (Debt Service Coverage Ratio) loan. Since most rental investors are “self-employed” under LLCs and have most of their assets tied up in investment properties, they often lack the tax documentation (W2s) and personal income necessary to secure conventional loans from banks or credit unions.
DSCR loans through private lenders were designed for LLC rental real estate investors to mitigate these challenges. These loans are strictly for long-term investments and are not available for investors looking to flip or convert a property into a primary residence. Rather than focusing solely on an investor’s personal income and tax return documentation, DSCR loans use a DSCR formula to identify eligible loan candidates. The DSCR formula looks at a property’s rental income (in-place or potential) and its principal, interest, taxes, property insurance, and association dues or PITIA.
DSCR loans through private lenders were designed for LLC rental real estate investors to mitigate these challenges. These loans are strictly for long-term investments and are not available for investors looking to flip or convert a property into a primary residence. Rather than focusing solely on an investor’s personal income and tax return documentation, DSCR loans use a DSCR formula to identify eligible loan candidates. The DSCR formula looks at a property’s rental income (in-place or potential) and its principal, interest, taxes, property insurance, and association dues or PITIA.
DSCR Formula = Rental Income / Principle + Interest + Taxes + Insurance + Association Dues
This formula determines a property’s DSCR ratio which identifies how profitable a property is or can be based on its overall expenses. Investment properties with a 1.2 DSCR ratio or higher are profitable in the eyes of private lenders and can be financed without W2 documentation or proof of adequate personal income.
For real estate rental beginners, DSCR loans are a powerful investment tool that provides a plethora of benefits, including:
For real estate rental beginners, DSCR loans are a powerful investment tool that provides a plethora of benefits, including:
- No personal income requirements
- Fewer documentation requirements
- No penalty for tax write-offs
- Fewer restrictions from private lenders
Long-Term DSCR Portfolio Loans
Single DSCR loans through private lenders help investment beginners secure financing to begin their investment portfolio. However, as your portfolio and ambitions grow, purchasing or refinancing multiple rental properties with a long-term DSCR portfolio (or simply a rental portfolio loan) is an advantageous venture for seasoned investors.
The Benefits of Rental Portfolio Loans
Once you’ve acquired multiple rental properties, your properties are no longer individual units, but a portfolio of investments. Rental portfolio loans through one lender combine loans for multiple properties under one umbrella loan.
These rental portfolio loans simplify owning multiple rental properties with benefits across the board, including:
These rental portfolio loans simplify owning multiple rental properties with benefits across the board, including:
Streamlined Loan Approval Processes
Rental portfolio loans eliminate many of the tax and personal income verification forms necessary for conventional loans, only requiring property-specific documentation to determine the current or potential cash flow, value, and cost basis of multiple rental properties.
Private lenders offering DSCR rental portfolio loans typically only require:
By eliminating tax return requirements, investors avoid any tax write-off penalties through rental portfolio loans. And, since you are consolidating all of your properties into one loan with one lender, loan application and approval processes are often streamlined and easier for lenders to digest.
Private lenders offering DSCR rental portfolio loans typically only require:
- Two months of bank statements showing 3 to 6 months of liquid reserves to cover debts in the case of vacancy, turnover, etc.
- Occupant lease(s) (if applicable)
- Insurance (property, flood, tornado, fire, liability, etc.)
- Renovation documentation–receipts, invoices, or work orders regarding any rehabilitation work on the property.
By eliminating tax return requirements, investors avoid any tax write-off penalties through rental portfolio loans. And, since you are consolidating all of your properties into one loan with one lender, loan application and approval processes are often streamlined and easier for lenders to digest.
Less Property Restrictions & Capital Limitations
Unlike traditional lenders like banks and credit unions, DSCR loans through private lenders come with significantly less governmental and institutional oversight. In addition to making it easier to obtain adequate funding and own multiple rental properties, private lenders can speed up loan processing times and create more investment opportunities.
How so? While conventional lenders must limit the number of assets or capital per borrower, rental portfolio loans through private lenders usually offer much higher caps on the number of properties, loans, and cash amounts for borrowers.
Additionally, with the right lender, rental portfolio loans for multiple properties also expand your investment options, allowing borrowers to invest in a variety of property types, including:
How so? While conventional lenders must limit the number of assets or capital per borrower, rental portfolio loans through private lenders usually offer much higher caps on the number of properties, loans, and cash amounts for borrowers.
Additionally, with the right lender, rental portfolio loans for multiple properties also expand your investment options, allowing borrowers to invest in a variety of property types, including:
- Single-family residences (SFR)
- 2-4 unit properties
- Warrantable condos
- Townhomes
- PUD
More Leverage & Flexibility
When working with traditional lenders that underwrite on a singular basis, you tend to face strict loan-to-value (LTV) restrictions. On the other hand, rental portfolio loans through private lenders allow for higher LTV–with some offering as high as 80% LTV!
Private lenders can also offer more flexible payment options, including interest-only options, and shorter amortization periods on multiple rental property portfolio loans. Lower monthly payments, along with higher LTVs, provide the leverage and financial flexibility to go after more investment opportunities and scale your business.
Private lenders can also offer more flexible payment options, including interest-only options, and shorter amortization periods on multiple rental property portfolio loans. Lower monthly payments, along with higher LTVs, provide the leverage and financial flexibility to go after more investment opportunities and scale your business.
Operational Efficiency & Cost Benefits
By creating a single loan for multiple rental properties, DSCR portfolio rental loans simplify operations with a single monthly payment–eliminating the stresses, risks, and time wasted processing multiple invoices from various lenders every month.
Additionally, with one financial backer, you get more than a lender–you get a partner. Private lenders have the flexibility to design portfolio loans with cost benefits compared to individual rental loans. Together, you can build a virtuous and profitable relationship that helps build your portfolio and business.
Additionally, with one financial backer, you get more than a lender–you get a partner. Private lenders have the flexibility to design portfolio loans with cost benefits compared to individual rental loans. Together, you can build a virtuous and profitable relationship that helps build your portfolio and business.
Turning Multiple Rental Properties into a Lucrative Investment Portfolio
Now that you know how to buy multiple rental properties efficiently and effectively, finding the right capital partner is essential to scaling your portfolio and business. CIVIC offers reliable long-term DSCR portfolio loans to help you consolidate your rental properties and generate cash flow.
Our long-term Rental Portfolio loan options provide investors:
CIVIC works with serious investors, looking to scale their rental portfolio and expand their business. By providing accessible and flexible financing options, we help you unlock new investment opportunities and grow your business without the common financial and logistical headaches of owning multiple rental properties.
Are you ready to level up your business and expand your rental portfolio with the best capital provider? If so, CLICK HERE to schedule a FREE consultation today!
Our long-term Rental Portfolio loan options provide investors:
- A singular DSCR blanket loan for multiple rental properties with no W2s, paystubs, or tax returns required
- 90-day seasoning for refinances
- Minimum 2-unit property count
- SFR, warrantable condos, townhomes, PUD, and 2-4 units eligibility
CIVIC works with serious investors, looking to scale their rental portfolio and expand their business. By providing accessible and flexible financing options, we help you unlock new investment opportunities and grow your business without the common financial and logistical headaches of owning multiple rental properties.
Are you ready to level up your business and expand your rental portfolio with the best capital provider? If so, CLICK HERE to schedule a FREE consultation today!
