Investor-Focused Financing Resources

Here's a breakdown of the lending criteria and parameters for our loan offerings:

Who We Lend To:

  • We lend to LLCs, corporations, and limited partnerships, excluding those held by trusts. Entities must provide corporate documentation.
  • We do not lend to non-profits or on properties held in trust. All property/entity interest holders must sign a guarantee.
  • Foreign nationals are generally not eligible; they are non-primary borrower guarantors with the necessary OFAC documentation.
  • We exclusively offer loans to investors for purchasing or refinancing investment properties. Owner-occupiers, second homes, or properties intended primarily for personal, family, or household purposes are not eligible.

Borrower Requirements:

  • No income verification, tax returns, or 4506 documentation is required.
  • Needed documents include any ID for each borrower/guarantor, a voided check, an insurance declaration page, entity documents, condo HOA contact (if applicable), current lender information (for refinances), and purchase contract/addendums (for purchases).
  • Minimum credit score: 660*; other credit requirements apply (no open foreclosures/bankruptcy within specified timeframes, minimum trade lines, payment history, etc.). *with some exceptions

Property Types:

  • We lend on rent-ready residential properties up to four units, excluding manufactured homes, mobile homes, and log homes.
  • We lend on small and mid-size apartment projects.
  • We also lend on New Construction AND Fix-and-Flips. BRRR for investors, too!

Minimum Property Value:

  • For most loans, the minimum property value is $250,000.

Property Condition:

  • We finance properties rated C4 or better by appraisers with no visible deferred maintenance.

Interest Rate and Financing:

  • Interest rates are determined by credit score, Debt Service Coverage Ratio (DSCR), and Loan-to-Value (LTV).
  • DSCR is calculated by dividing monthly rent by PITIA (Principal, Interest, Taxes, Insurance, and Association Dues).
  • Loans are based on the property's rental value and current condition; no DSCR lending is based on after-repair value (ARV).
  • Subordinate financing is generally prohibited; the property should be lien-free upon loan closing.

Refinancing Distinctions:

  • A transaction yielding cash back equal to or less than $2,000 or 2% of the loan amount is a rate and term refinance. Otherwise, it's considered a cash-out refinance.

For personalized rate information or specific inquiries, please get in touch with Michael at (512) 914-0670.

What are Private/Hard Money Loans?

Hard money loans offer an alternative financing option for real estate purchases, distinct from conventional bank loans and government loan programs. Provided by private lenders, these loans are secured by assets, typically the property being financed, rather than relying as heavily on the borrower's credit history. Unlike traditional mortgages or construction loans, hard money loans offer greater flexibility due to fewer regulatory constraints on private lenders.

Pros

  • Speed: Faster approval and loan closing compared to conventional financing.
  • Flexibility: Adjustments to loan terms are possible, providing more flexible options.
  • Security: Backed by the property, not solely dependent on personal credit and assets.
  • Approval: Private lenders may consider projects and borrowers that major financial institutions might reject.

Cons

  • Cost: Higher interest rates (approximately 10-20% higher than standard mortgage rates) due to short loan lifespans (12 to 60 months). Longer terms available on rental refi and purchases.

How Hard Money Loans Work

Hard money loans are suitable for DSCR cash-outs, property flipping, BRRR (buy,repair,refi,repeat) investors, construction projects, and investment property acquisition. The loan's short duration and higher interest rates anticipate repayment often within two years and commonly through property sale or securing a standard mortgage for a primary residence. Applying for a hard money loan is initially similar to the process for conventional investment or construction loans, with less emphasis on credit scores or tax returns.

Tips for Finding a Hard Money Loan

  • Choose a local broker or lender for flexibility and familiarity with the local real estate market.
  • Look for a reliable lender with a positive reputation, backed by successful project portfolios.
  • Research and read reviews to ensure credibility.

Texas Hard Money Loans:
For those seeking hard money loans in Texas (note-we love Texas but actually do business nationwide!) the Texas Lending Group offers quick, reliable funding with competitive rates and no extraneous fees. Partnering with the fastest private lenders in Texas, we cater to construction, renovation, fix-and-flip, DSCR, and more. Known for excellent customer service, we prioritize efficiency and keeping costs low. Application for a loan program will initiate your project—swiftly!

Conclusion: Hard money loans, designed for both short and long- term real estate investments like investor cash-outs, property flipping, BRRR, or new construction offer benefits that outweigh the associated challenges of traditional bank loans. To make the most of this financing option, create a clear project plan and call Texas Lending Group!

Texas Lending Group

What Are DSCR Loans???

A DSCR loan serves as an ideal starting point for stepping onto the real estate ladder OR for a DSCR refinance when your original note is ballooning or coming due!!
Securing a rental property loan at an excellent rate can propel you forward, initiating the momentum necessary to generate passive income through real estate.

Key Features:

  • 21-35 Day Close: Swift processing to facilitate your property acquisition efficiently.
  • No Tax Returns: Simplified process without the need for tax returns.
  • No Income Verification: Eliminating the necessity for income verification.
  • No Employment Verification: Bypassing the need for employment verification.
  • 91 Day Seasoning: A streamlined process allowing for quick action, benefiting investors seeking opportunities without extensive waiting periods.

Overview of DSCR Loans:

DSCR (debt-service coverage ratio) loans offer a distinctive lending approach that doesn't rely on traditional income or net worth assessments to determine borrowing amounts.

Instead, the loan amount is determined by calculating the property's cash flow generated from rental income, used to cover the monthly debt obligations. These loans typically apply to properties with 1-4 rental units, potentially extending to 10 units. The term "non-QM" (non-qualified mortgage) is often used interchangeably with DSCR loans, indicating lending criteria distinct from conventional loans. These loans focus primarily on the cash flow potential of the property rather than the borrower's financial situation. The qualification rules and underwriting guidelines allow for customized loans tailored to individual requirements.

How DSCR Loans Operate:

Previously limited to commercial properties, DSCR loans are now available for residential units as well.

This means that 1-4 family AND small apartment building are great properties for DCSR loans! Call Michael at
(512) 914-0670 to discuss your scenario!

The loan size is calculated by dividing the property's monthly rental income minus expenses (net operating income, or NOI) by the mortgage payment, resulting in the DSCR ratio. Loans with ratios above .75 generally lead to loan approval, with higher ratios (e.g.1:1 ) being more favorable.

Because this calculation is straightforward and doesn't necessitate proof of regular income or tax returns, the approval process is significantly faster than that of conventional loans. The property is the primary consideration, making it advantageous for investors who might not meet traditional investment mortgage criteria.

Applying for a DSCR Loan:

The application process is straightforward. Once you've identified your investment property, you'll need to provide accurate financial details related to its potential rental income.

This includes:

  • Property value.
  • Monthly rental income.
  • Reasonable property expenses such as maintenance costs, rent rolls, tax returns, and operating statements.

These details are assessed to determine the property's NOI and calculate the DSCR ratio. If the ratio is favorable, the loan will be promptly made available. The entire process can be completed in as little as 21 days.

Is a DSCR Loan Suitable for You?

DSCR loans are an excellent option for expanding your rental property portfolio without requiring extensive net worth or employment information. They cater to individuals who:

  • Are self-employed with a complex or limited financial income history.
  • Work as freelancers.
  • Have reached their credit limit with traditional borrowing.
  • Prefer not to disclose employment information.
  • Have limited liquid capital.