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DSCR Loan Case Scenario
CASE SCENARIO QUESTION FROM TAYLOR GILMORE ON DSCR LOAN
Hi Gustan,
Could you do the deal below?
commercial
refinance
in LA
on Westin
currently occupied to child care center
government program
DSCR is 1.49
building appraised for $1.2mn
$500k loan currently on property
mortgage she’s paying is $3500
income from child care center is $5400
good DSCRBest regards,
Taylor Gilmore-
This discussion was modified 1 year, 9 months ago by
Gustan Cho.
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This discussion was modified 1 year, 9 months ago by Gustan Cho.
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This discussion was modified 1 year, 9 months ago by
Sapna Sharma.
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This discussion was modified 5 months, 2 weeks ago by Sapna Sharma.
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This discussion was modified 3 weeks, 6 days ago by Sapna Sharma.
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This discussion was modified 1 year, 9 months ago by
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1 Reply
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Real estate lending issues for investors with properties that can be described as partially commercial and partially residential are quite honestly a headache in the most sincere terms. People’s situations seem pretty complex, especially when considerations are given to what category the property is going to fall into and, most importantly, what its usage is.
Explanation of the procedures:
Guidelines for identifying property types:
- If it’s a house situated in a residential neighborhood and appears to be residential, it is classified accordingly.
- If it is lower than the current rent, a DSCR will be computed using a hundred-four appraisal and a hundred-seven rental market supplement.
Other factors that a loan officer considers include the following:
- The information to be provided includes the loan amount, LTV, credit score, zoning, lease term, credit scores, ownership period, and acquisition price.
Concern:
- Determining whether a house is in a mixed-use, residential, or commercial zone.
- Zoning laws determine the final appraisal of the house:
Residential zone: For a house treated as residential, this will even be the neighborhood where the house is situated.
Commercial zone:
- This commercial property has different loan and appraisal requirements.
- Leasing and formally signing a decree Q1, whereby properties are measured to become completely institutionalized houses/invested in long-term leases such as state-certified daycare.
- For example, lease agreement bodies determine how the property type is bound to be classified regarding the investment.
- DSCR computations might take the minimum value between the lease sum and seven rental markets supplementary over the hundred units for only seven.
Rebuild Letters and Conditional Use Permits:
Rebuild conditional use permits might require the submission of documentation, such as a rebuild letter issued by a city or county.
Next Steps for the Loan Officer:
Complete the form to gather all the requisite details.
Determine Zoning and Use:
- Check the zoning district’s classification to see what appraisal category and loan could be used.
- Evaluate the lease agreement and 1007 supplement to ascertain the DSCR based on the lease rate and rental values.
- This approach should clarify the property’s classification.
- Thus expediting the processes surrounding loan decisions.
- It would help if one had a form to share, as that would assist in capturing the required information promptly.
Please let me know if you need any other information or help with the next part!