DSCR: What it Means to You

Often viewed as one of the least understood aspects of asset-based lending, DSCR is an essential tool for rent-and-hold investors. If you’re a landlord, you’re bound to hear the term DSCR while working with a real estate lender. DSCR, which stands for Debt-Service Coverage Ratio, can help you get a lower rate, or alternatively disqualify you from certain loan products when seeking investor financing. 

DSCR: THE BASICS

From a lender’s point of view, DSCR refers to the borrower’s ability to pay back a loan based on the monthly rent of the property. Essentially, it is a way to measure cash flow. What’s tricky about DSCR is that each lender may calculate the number differently, and have their own minimum DSCR requirements.
With all these factors, it can be difficult to navigate DSCR, not to mention the landlord lending process, which is why we asked resident expert, Visio Sales Manager Brandon Foskey for his tips and tricks when it comes to financing using DSCR.
“Lenders are always looking for way to measure how likely a person is to repay their loan” Foskey said. “A good DSCR provides the lender with a little bit of reassurance that the borrower is getting enough monthly rent to cover their monthly mortgage expense.”

CALCULATING DSCR

So what exactly is a good DSCR? Lenders tend to calculate DSCR differently, some more detailed than others. Visio for instance, uses a fairly simple DSCR calculation: the monthly gross rents divided by PITIA (monthly principal plus interest, taxes, insurance and association dues).

Because of these differences, there is no universal number required for a loan. The base DSCR requirement for a Rental360, 30-year fully amortizing landlord loan is 1.2. There are some general guidelines to follow when seeking financing however.

“Anything above 1.0 means the investor is getting more rent then their monthly payment,” Foskey said. “Anything above 1.2 is usually considered a ‘good’ DSCR, and anything above 1.5 is considered a ‘great’ DSCR, with many lenders requiring a 1.2. The better (or higher) your DSCR is, the easier it is to obtain financing at the best rates.”

IMPROVING DSCR

Some elements of DSCR are not within the borrower’s control, such as tax rates, market rents, flood zones, HOAs, etc. Foskey’s advice?
“Investors can improve their DSCRs a few ways: increase their down payment to lower their LTV (lower their loan amount), shop for insurance and try to get a lower insurance rate, strengthen their credit score to get lower interest rates and rehab the property into pristine condition so they can charge top market rent for the area,” he said.
Here are some more tips on how to keep your DSCR high:

• When you rehab the property do it right the first time. The better the rehab and the better the property shows the more rent you can charge.
• Pay your bills on time. Having good credit in this business and the ability to leverage your cash is crucial in building your real estate empire.
• Choose your investment areas carefully. Look at the market rents, vacancy rates, tax rates, insurance rates, flood areas, and local schools. Higher tax rates equal higher payments.

And remember, even if your DSCR ends up lower than you expect, it doesn’t mean that the property is a bad investment. There are many reasons to make a property investment—from a high-appreciating area to longer-term investment plans based on market trends.

“Understanding DSCR can make you a better-informed investor, but it isn’t the end all, be all,” Foskey said. “Trust your gut, and make sure your investment fits your strategy. You’ll come out on top.”

Need a purchase or cash-out refinance loan for an investment property?

Our asset-based philosophy results in a simple, fast, dependable process that enables us to close in little as two weeks. Let's get your application started by calling one of our Account Executives (401)236-5060                 
 Please note that we do not lend to owner-occupiers, only investors.

 

10 Secrets To Sell Your Rhode Island House Fast

 

10 Secrets To Sell Your Rhode Island House Fast

What we’ve got here today are 10 tips that can help you sell your Rhode Island house fast. Sometimes it’s the little things that can make the biggest difference in getting the sale, so we hope these tips can be put to use to assist with the sale of your property.

 

Secret # 10: Cut the price

Cut the price! Yes, we’re actually advocating that you snip off 10-20% from the retail price of the property. Now, that doesn’t mean that you’ll necessarily be taking that big of a hit on the price, in fact, sometimes it can have the opposite effect in that you’ll create a bidding war that will drive the price up! Under the right conditions, undercutting the competition can be a great way to sell your Rhode Island house fast.

Secret #9: Tidy Storage Areas

Great storage areas is something that every buyer is going to be looking for so be sure that your cabinets and closets aren’t half-full of junk and clutter. It might now seem like this would make a big difference, but when that buyer opens up that closet door and stuff falls out around their feet, it really does give a bad impression. Keep those “out-of-sight” areas clean and tidy and your prospective buyers will feel better about the space – which equates to better offers which will help you sell your Rhode Island house fast.

Secret #8: Maximize Lighting

To sell your Rhode Island house fast, it’s important that your home have some great lighting. You don't want it to look like a cave when people are walking through. A dark room is kind of depressing, so brighten up those rooms by adding some strategic lighting to kill all those shadows. It makes a big difference.

Secret #7: Interview some Realtors

Sell your Rhode Island house fast by getting the inside scoop from some of the heavy-hitter realtors. You don't have to necessarily sign with them, but have a friendly conversation with them and pick their brain. This could gain you some valuable insight on the market and how you stack up against the competition. Of course you can always sign with a realtor, but if you are truly wanting to sell your Rhode Island house fast, this option usually takes longer and will definitely cost you big on commissions.

Secret #6: Hide the pet stuff

You probably think your critter would warm the hearts of your prospective buyers, but it is usually a big drawback. They want to focus on the house and not be distracted by your pets and pet accessories all over the place. Trust me, you’ll sell your Rhode Island house fast if you can hide the pet stuff and keep it out of sight. It makes a big difference.

Secret #5: Don’t over-do the repairs

Quick fixes are one thing, but you don’t have to go completely nuts on a rehab as long as your house is already in good shape. Sell your Rhode Island house fast by focusing on the thing that are the biggest drawback to the property, and let some of the minor things go. A new homeowner is usually ok with fixing some really simple things, and they’ll often prefer to handle some light cosmetic stuff just to make the house their own.

Secret #4: Sell a house, NOT a home

One of the most important things to do when selling your house is to de-personalize it. The more personal stuff in your house, the less potential buyers can imagine themselves living there. So I suggest getting rid of all the stuff that has your family details all over it. You want it to be a “sterile” space so that the buyer can picture themselves living there instead of trying to see past all of your personal stuff. You’ll sell your Rhode Island house fast without all the personal memorabilia in sight.

Secret #3: Kitchen, kitchen, kitchen.

You’re not actually selling your house, you’re selling your kitchen – that’s how important it is. The benefits of remodeling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace countertops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen. Make the kitchen show top-notch and you’ll sell your Rhode Island house fast.

Secret #2: Be ready-to-show at all times

Your house needs to be “show-ready” at all times – you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold. If you want to sell your Rhode Island house fast, you’ve got to be ready to show that sucker when the buyer is ready.

Secret #1: The first impression is everything

You only get one shot at the first impression. Sell your Rhode Island house fast by making the absolute most of this fact. The house has to be clutter free, clean, bright, and even smell nice. Have a friendly attitude when you show your house. Just keep in mind that you only have one shot with this buyer. The first impression is everything.

 

Of course, if you could use a cash offer for your Rhode Island house now, simply reach out to RH Wiggins.

What You Should Know About The Services We Buy Rhode Island Houses Locals Can Use

                                  

If you have been trying to offload your home with little success, you should know that you are not alone. It can take months or even years for some properties to attract qualified buyers on the traditional housing market. For this and other reasons, many consumers are opting to use the services like We Buy Rhode Island Houses companies are offering.

There are a number of impressive benefits that homeowners can gain by choosing to work with these professionals. Foremost among these is the fact that they are instantly connected with qualified buyers who are ready to close deals. This is advantageous in two ways. First, it is not necessary to wait for a prospective buyer to secure funding approvals before accepting offers from these entities. They are more than capable of financially backing the offers that they make. Second, these entities are in the business of purchasing homes exactly as they are. Thus, you won’t have to spend money and time attempting to convince them that your home is a worthwhile investment.

Many sellers are attempting to offload their homes due to financial difficulties. Their house payments might be higher than they can afford over the long-term. For these individuals, the typical sales process is not feasible. Not only will it be difficult, if not impossible, to continue making mortgage payments while waiting for qualified and interested buyers, but it will also be hard to invest in home improvements.

Those who are interested in purchasing properties often make quick judgments on homes based upon their appearances. If cabinetry is outdated or flooring needs to be replaced, they will not see beyond these aesthetic flaws and are therefore, not likely to make worthwhile offers. This is one factor that makes it difficult to sell homes in an as is condition on the traditional housing marketing.

Companies that are willing to purchase homes in a nominal amount of time are committed to buying these properties just like they are. They are rarely concerned with property condition, given that they intend to fix their purchases up and resell them. Thus, you can sell your home immediately, even if it is unattractive or in a relative state of disrepair. This is a tremendous boon for sellers who have not been able to stay on top of their home maintenance or undertake any major home improvement projects throughout the years.

The purchasing process is designed to be a swift and seamless one. You simply need to contact these companies and schedule a viewing of their home. They will perform market research in order to assess the true value of your property in comparison to other, similar homes in your neighborhood.

After they have viewed your home, they will compare this with the research that they have performed on your property and your neighborhood. They will then approach you with a reasonable offer. Upon your acceptance of this offer, the purchasing process can come to a completion in just a matter of days or weeks.

The most important thing to know about working with these companies is the fact that you are not obligated to accept with these offers. Your retain complete control over your home until you choose to sell. Thus, you can take as much time as you need to think your decision over, or you can accept the offer right away in order to expedite the sale.

Rhode Island Real Estate Leads Are You Tired Of Stuffing Envelopes to Get No Leads? We know how hard it is to get really good leads these days. Whether you are sending yellow postcards yourself, or trying to do SEO on your own website or blog, the truth is there is too much competition from other investors and homeowners hardly ever trust direct mail correspondence that promises to solve all their problems. We have motivated real estate seller leads in you area. Wouldn’t it be easier to get the homeowners to come to you? When a distressed homeowner looks for solutions to save or sell their house online, they usually land on one of Avalon s' websites. By filling out a form, they confirm their intention to sell their property. They are past the negating and ignoring phase and ready to get help; there is no need to convince them they need you. As real estate investors ourselves, we know there is many things that can be done to save a house with a little creativity and some working capital. We are looking for highly motivated real estate investors who can take an opportunity in the form of a lead, and transform it into cash. Each case is different, and to truly take advantage of all leads, you might need to get creative. That said, if you are closing at least 1 deal a month, have capital to invest, and want to increase your business – this opportunity is for you. These are the most recent Rhode Island real estate leads to come through our system as of 02/18/2015. These are actual motivated sellers in Rhode Island. Only the names and contact information have been changed.

Amy Cranston, RI 02910 Home Phone: 401-XXX-XXXX House Details Value of Home: $200,000     Repairs Needed: $0 Bedrooms: 3 Square Footage: 2000 - 2500 Bathrooms: 1 Lot Size: < 1/2 Acre Basement: Finished Age of Home: 30+ years Occupied? Yes Listed with Realtor? No Monthly Mortgage: $1,573 Current on Payments? Yes Owed in Backpayments: $0 First Mortgage Payoff: $176,000 2nd Mortgage Payoff: $0 Reason for Selling: Separation/Divorce Time Frame: 4 Weeks Comments:   Pam or Jim warwick, RI 02886 Home Phone: 410-XXX-XXXX House Details Value of Home: $225,000     Repairs Needed: $20,000 Bedrooms: 3 Square Footage: 1200 - 1400 Bathrooms: 1 Lot Size: < 1/2 Acre Basement: Unfinished Age of Home: 30+ years Occupied? No Listed with Realtor? No Monthly Mortgage: Current on Payments? Owed in Backpayments: First Mortgage Payoff: 2nd Mortgage Payoff: Reason for Selling: Financial Issues, Health Reasons, Investment Property, Settling an Estate/Inheritance Time Frame: No Hurry Comments: TWO OTHER HOMES ON SAME ST. ASKING $240000   Elizabeth warwick, RI 02889 Home Phone: 401-XXX-XXXX House Details Value of Home: $193,000     Repairs Needed: $15,000 Bedrooms: 2 Square Footage: 1000 - 1200 Bathrooms: 1 Lot Size: < 1/2 Acre Basement: None Age of Home: 30+ years Occupied? Yes Listed with Realtor? No Monthly Mortgage: $1,200 Current on Payments? No Owed in Backpayments: $12,000 First Mortgage Payoff: $120,000 2nd Mortgage Payoff: $0 Reason for Selling: Financial Issues, Moving/Moved, Need a Different Size Home Time Frame: 1-2 Months Comments:   frank warwick, RI 02886 Home Phone: 401-XXX-XXXX House Details Value of Home: $285,000     Repairs Needed: $5 Bedrooms: 6 Square Footage: 1000 - 1200 Bathrooms: 2 Lot Size: < 1/2 Acre Basement: Unfinished Age of Home: 30+ years Occupied? Yes Listed with Realtor? No Monthly Mortgage: $1,898 Current on Payments? No Owed in Backpayments: $8,000 First Mortgage Payoff: $249,500 2nd Mortgage Payoff: Reason for Selling: Financial Issues Time Frame: ASAP Comments:   Scott Portsmouth, RI 02871 Home Phone: 401-XXX-XXXX House Details Value of Home: $355,000     Repairs Needed: Bedrooms: 4 Square Footage: 1400 - 1600 Bathrooms: 1 Lot Size: 1/2 - 3/4 Acre Basement: Unfinished Age of Home: 30+ years Occupied? Yes Listed with Realtor? No Monthly Mortgage: $2,000 Current on Payments? Yes Owed in Backpayments: $0 First Mortgage Payoff: $310,000 2nd Mortgage Payoff: Reason for Selling: Separation/Divorce Time Frame: Comments:

How do I take advantage of this opportunity? Simply fill out our form, and we will contact you to see if you are a qualified investor.

                                                          

Selling Your Home to Real Estate Investors

If you have decided to sell your home you may have noticed several “We Buy Houses” signs that flood the intersections of your city. These signs are placed buy Real Estate Investors looking to buy your home. Selling your home to Real Estate Investors can be the very best option for several reasons.

Let’s take a look at a few:

Top reasons for selling your home to Real Estate Investors.

Cash Offer – Real Estate Investors can pay all cash and close in as little as 7 days in most cases. This gives you the comfort of knowing your exact closing date. No hassles of putting your house on the market to wait 60+ days (if your lucky) to hopefully get an offer (which is typically well below asking price).

• Buy “As-Is” – Selling your home to Real Estate Investors you will not need to make any repairs to the home. Real Estate Investors will buy “As-Is” saving you thousands or ten’s of thousands of dollar’s in repairs. When selling retail you will have to make the majority of repairs and major repairs in order for the end buyer to receive bank financing.
• Flexible Payment Option & Terms - Selling your home to Real Estate Investors will allow you to have options when trying to sell your home. Several times depending on the situation Real Estate Investors can create options that traditional banks will not allow. Such as Seller Financing, Subject-To’s, or Wraparound options. This allows the Real Estate Investor to work with sellers that need to sell now and have equity or little, to no equity. Buy creating these options it allows the seller to get rid of a problem property without damaging their credit for a future purchase.
• No Showing Your Property – Selling your home to Real Estate Investors you will not have the dreaded “we will be at your house in 30 minutes” phone call. You don’t have to worry about showing your property to anyone and everyone looking to buy a house. Then not knowing if you will get an offer or not.
• No Realtor Commissions – Selling your home to Real Estate Investors you know exactly what your net dollar amount will be at closing. The Real Estate Investor pays all closing cost so you will not have to guess at how much you will get a closing.

These are just a few ways selling your home to Real Estate Investors can be beneficial to you. For more information on how selling your home to Real Estate Investors can work for you please feel free to contact me 401-236-5060 and ask for RH.

Funding Home Renovations

How to Earn Up To 25%, Every 6 Months, By Simply Funding Home Renovations

 

• Renovation Funders is a platform to match owners who wish to renovate their homes before selling them, with investors who are willing to fund the renovation in exchange for a up to a 25% gain (negotiable) upon the sale.
• Investor funds can always be title insured and secured by the properties that often have very substantial equity, which gives our investors great peace of mind. We think you’ll agree that our high equity renovation funding deals can be MUCH safer than the vast majority of real estate investments.
• Here’s our “boilerplate” (all negotiable) investing process, typically made turnkey by your Area Partner…
  1. Live deals to consider investing in are emailed to you.
  2. When interested in a deal your Area Partner coordinates all due diligence to see if the deal is investment grade in your mind. If you determine “yes” escrow arranges title insurance and records two security instruments against the property to protect your investment.
  3. You fund escrow the joint venture closing costs (reimbursed to you by the owner upon the sale to the end buyer) and the minimum amount required to get the contractor to man the job.
  4. Your Area Partner coordinates inspections of the property for you, so that you can confirm the renovation progress prior to funding future renovation payments to the contractor.
  5. Upon renovation completion the owner agrees that the property is listed on the MLS and the price automatically drops 3% every three weeks until sold, virtually guaranteeing a relatively fast sale.
  6. Escrow contacts you prior to closing the sale to the end buyer, to release your liens in exchange for 100% of your investment back plus a percentage of the sale price.
  7. Upon closing escrow wires your funds directly to your account, which concludes the joint venture.

Investments typically range from $35,000 on the low side to up to $400,000 on the high side, and joint venture opportunities arise in all United States markets. You can invest IRA funds (we’ll refer you to a custodian who will guide you through the relatively simple process) and you can invest virtually any other funds that you have set aside for investing.

First step? Watch our video that explains how our program benefits Investors. If you want to see some live deals then go ahead and register at the site and we’ll send you a welcome email.

WATCH The Video - http://tinyurl.com/avaloninvest