DSCR Loans – Cash-Flow Mortgage Solutions for Real Estate Investors
Real estate is consistently a top choice to invest in even in volatile markets. Many investors are buying investment properties now and aren’t having a problem earning a profit right away. In most markets, properties typically rent immediately generating rental income and a solid return on investment. This is why real estate investors continuously purchase properties to build prosperous portfolios. Originators have the opportunity to help repeat clients that will stick with them as long as they can procure quick closings. The key for the originator is the right lender and loan product for their beginner or seasoned investor clients. Angel Oak Mortgage Solutions is that lender! Along with excellent resources we offer a DSCR Investor Cash Flow product that is one of our most popular loans for real estate investors. Understanding the market, projections, and products available is critical for investors. A smart originator knows up to date market conditions, real estate trends and the benefits of using an Investor Cash Flow product to help their investor clients close quickly. The originators we work with get the knowledge they need from our account executives. The best part about helping real estate investors is that they buy regardless of market conditions. If there is a demand for rental properties, they are in!
Market Conditions Typically Don’t Matter
One of the largest challenges in the in the market has been affordability and inventory. The demand for rentals has increased, therefore, rents are high and inventory is tight in this space too. Regardless, the demand for rentals is strong and growing. This is because many people are shut out of buying a home due to the increase in home prices and rising interest rates. The strong demand in the rental market is making it a lucrative one for real estate investors and the originators who help them close their deals. There will always be demand for rentals and real estate investors should continue to build their portfolios regardless of the conditions in the market.
Today’s mortgage industry brings tight credit markets, borrowers with lower credit scores, and those who can’t afford down payments or higher home prices. CoreLogic reports that real estate investors made up 28% of all single-family purchases in February of 2022. This is a record high going back to 2011. March 2022 came in at 27.9% – just slightly lower. Higher priced properties are not a concern for many seasoned real estate investors who know where to find viable properties across the country. Investors who are new to buying investment properties should not be concerned, as finding cheap properties is still a possibility and an experienced originator can help them. In some cases, affordability issues are isolated to certain markets and affordable investment properties are plentiful coast to coast making real estate a great investment strategy. That is great news since Realtor.com reports that rental growth for lower priced homes might outperform the rest of the market. Rising home prices combined with higher rent prices places real estate investors in a position for a greater return on their investments.
Build-To-Rent And Other Trends
Many builders are capitalizing on the rental market with new single family starts for rent and more entry level homes. Rental communities will become more common due to demand. The build-to-rent market is exploding and builders want in. Due to COVID and delays in building supplies, the homebuilding sector underperformed in the past few years and now this is an area set for growth. There are developers jumping on the trend of building single family rental communities for renters looking for amenities and a lifestyle not found with apartment complexes. According to the National Association of Home Builder’s (NAHB) analysis of the Census Bureau’s Quarterly Starts and Completions by Purpose and Design data there were around 21,000 single-family built-for-rent starts during Q2 of 2022 – a 91% gain over Q2 2021. In fact, over the last four quarters, 69,000 homes were in new build-for-rent construction accounting for a 60% increase over new single family starts in the prior four quarters, according to Robert Dietz, chief economist at NAHB.
Millennials still account for the largest demographic in the rental market. Renting single family homes have become the new starter home for millennials. Many are renting longer than planned due to increased home prices. Real estate investors are cashing in with increased rents and an accelerating rental market.
Originators – this is the market to focus on to increase your volume and add repeat clients buying multiple properties at once. There just happens to be the ideal loan product to help make it happen – Investor Cash Flow!
Investor Cash Flow Mortgage Loan – A Powerful Tool for Originators and Their Investor Clients
Investor Cash Flow loans are one of the easiest loans to originate and they close quickly. This product does not require income, tax returns or employment information for qualification. Instead, borrowers qualify on the rental cash flow of the property. Guidelines are more flexible with no limit to total number of properties and the 30-year fixed loan is not an ARM. There is a 40-year interest only option available too. We also offer delayed financing where investors can pay cash to win a bid, and then get the majority of it back within six months of purchase without waiting. They can then use that cash to renovate that property – or buy a new one. That’s great news for investors saving money on the life of the loan. As well, we accept non-warrantable condos and real estate investors can title in an LLC. Many originators use our Investor Cash Flow loan as an easy and quick way to complete a 1031 transaction.
Our product is a DSCR loan requiring that borrowers maintain a minimum debt service coverage ratio of 1.0. DSCR is the measurement of a property’s available rental cash flow to pay the debt on the loan.
Our account executives are experts helping originators increase their volume closing these loans. As well, our account executives can help you market this product to your borrowers. Angel Oak Mortgage Solutions is your lending partner making sure you close these loans protecting your business and referrals.
The Key Is The Right Lender
With such strong demand for rentals, competition among investors is fierce. These borrowers need a seamless loan process with a quick closing product. Make sure you work with the leader in non-QM and expert in closing loans for real estate investors. Once you help someone close a deal that will earn them money you will be their go-to originator. That means you need your go-to – that would be Angel Oak Mortgage Solutions! A repeat investor client can be a lottery win for an originator. Who doesn’t want a client that continuously closes deals for multiple properties at the same time? Keep them happy working with us and having access to our non-QM products.
The mortgage industry has experienced a transition very beneficial to those who have utilized non-QM over the years. Non-QM is more in demand now than ever and is the largest growing sector in the mortgage space. The rental market is not slowing down and this is where you look for new business and Angel Oak Mortgage Solution is how you keep that business coming. Become a go-to originator for property investors simply by choosing the right lender.
Partner with Angel Oak Mortgage Solutions and protect your business and referrals – no matter the market!