Have you thought about your exit strategy?
Maybe you have found a distressed property with lots of meat on the bone—ripe for a short-term fix and flip.
Or maybe you are looking to add some passive income to your portfolio by investing in a short- or long-term rental.
Perhaps you intended to fix and flip but changed your mind and are now looking to rent it out. Or maybe you want to rent it out for a while but then sell it when the economy shifts. We get it. In this economy, sometimes you need to pivot.
Rent It Out
If your initial exit strategy is to rent the property, there are a few things to consider. We advise our clients with rental property to look closely at the market rents in the area. You want to ensure that the neighborhood will support what you’re offering, that the DSCR equation works, and that your ratio is well above 1.0.
When calculating expenses, we recommend adding a cushion to cover unexpected vacancies. Generally, we like to see our clients factor in a 5-10% vacancy allowance to reduce the overall risk.
Decide To Sell
But what if you want to rent the property for a while but also have the option to sell it down the road? Maybe you expect the housing market to eventually become more favorable to sellers or you want to rebalance your portfolio overall.
Whatever the reason, we have options for you.
We offer DSCR loans with 3-year and 1-year pre-payment options which means that you can sell the property and pay off the loan early with ease. Many of our clients want the flexibility to sell an investment property in the near future without worrying about high interest or balloon payments. With our 1-year prepayment option, investors can access our 30-year DSCR loans without paying a hefty fee if they pay off the loan early.
Compared to a traditional bridge loan, these DSCR loans have lower interest, higher LTVs, no balloon payments, lower closing costs, and longer terms.
Want to discuss your options with one of our loan officers? Reach out to 888.444.3160 or firstname.lastname@example.org to be put in touch. Or click the link below to get a quick no-obligation quote for your next project. It’s that easy!