The real estate market is more competitive today than ever before, with low inventory and soaring prices making it harder and harder for investors to turn a profit. When it comes to financing investments, conventional mortgage loans often fall, with lengthy approval times and a stringent application process that can limit potential deals. As a result, many investors are turning to DSCR loans, specialized rental property financing offered by private lenders who operate in the real estate space. These loans offer many advantages to investors, and for brokers and lending partners, they provide a better way to finance these properties and close more deals.
Are you a lending partner that’s considering adding DSCR loans to your product offerings? Read on as we cover what makes these such powerful financing tools and how utilizing them helps position you as a go-to broker in the competitive real estate investment space.
As limited inventory has forced many would-be home buyers to turn to renting, demand for rental properties has increased, and investors have begun to take notice. Both rents and property appreciation rates have grown, making rental property one of the smartest investments you can make today. This has led to increased competition for investors and in the lending space for brokers and lending partners. The ability to deliver fast, reliable, and flexible funding has become key to securing deals and effectively growing your lending business. Competitive loan products help your clients close deals faster, and the added flexibility allows you to fund deals even when other lenders might have turned down a borrower.
So, how does DSCR financing give you and your clients a competitive edge? Since these loans rely on the Debt-Service Coverage Ratio to qualify properties for financing, a borrower’s personal finances are less of a factor in loan approval. This means that a borrower can still be approved for a loan even with less than perfect credit or non-W2 income. A simplified application process also means that these loans can be approved faster, with closings in as little as 10 days, as opposed to weeks or months with a conventional mortgage.
Private lenders are generally more flexible as well, and more willing to customize loan terms to fit a project’s needs. That includes tailored repayment plans, such as interest-only loan options. This added flexibility can be a massive advantage, allowing you to fund deals in scenarios where you previously weren’t able to, even when conditions aren’t ideal.
DSCR loans allow you to align financing terms with your client’s investment goals. Using DSCR allows lenders to quickly determine how profitable an investment is and ensure a borrower’s ability to repay the loan. This assurance means lenders are willing to customize loan terms to fit the borrower’s needs, whether it be adjusting LTV or amortization options. You act as the intermediary between clients and lenders, and it’s up to you to adjust loan terms and put the borrower in a better position to scale in the long term. Take time to understand your borrower’s financial situation and investment goals and work closely with your chosen lending partner to find the balance in a deal where everyone involved wins.
Finding a trusted lending partner to work with is one of the most important decisions you will make. A responsive lending partner can help you provide better service and deliver financing faster, which helps you close more deals. Ideally, they will not just have experience in the real estate space but will understand the unique needs of rental property investors and the brokers that work with them. This means transparent pricing on all loan types, but also things like broker education & training programs and white label marketing support. A quality partner helps you stand out from the competition by both increasing your reach and streamlining your closing process.
If you want to close more rental property loans, you need to focus on reaching this specific market segment with your business efforts. By positioning yourself as a resource for rental property investors, you can begin to build credibility as an expert in this market segment. For instance, you can offer free advice on social media platforms, covering topics like rental pricing trends, and regulatory changes. You can also utilize social media as a way to build trust, by sharing testimonials & customer success stories. Providing customers stellar service helps you two-fold, as satisfied clients often go on to share their experience with like-minded investors.
To help your clients maximize the returns on their next investment, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer rental property financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.