If you're ready to begin your investment journey, there's no better state to start than cozy Connecticut, where real estate investors can find a plethora of opportunities for high-performing rental properties that will surpass even their most optimistic expectations.
While not experiencing the meteoric growth of other states, Connecticut's (GSP) was a highly favorable $250.2 billion in 2022, surpassing 2021 by 0.2%. Rents continue to rise, and its robust tourism economy remains strong.
Real estate investors nationwide have relied upon Visio Lending for its streamlined process, excellent DSCR loan terms, and dedicated customer service. Whether you're seeking to purchase long-term or short-term rentals there's no better place than Connecticut - and no better lender than Visio.
DSCR loans focus almost entirely on potential rental income rather than the borrower's annual debt obligations, so you do not need to provide income verification as you would with a traditional home loan or business loan.
There's no need to procure pay stubs or tax returns, but you do need to meet the minimum credit score, and the property needs to have a good DSCR ratio.
The minimum credit score for a DSCR loan in Connecticut is 680. Like with other loans, you will get better interest rates with a better score. Interest rates for DSCR loans are usually about 1% to 2% higher than other loan types.
The property needs to be appraised to ensure that it is worth the DSCR loan amount. In addition, the property's rental income must be assessed based on the average rate for rental properties in the area to ascertain the market value. This will be done through a 1007 Rent Schedule, which is then used to calculate whether your DSCR loan has a suitable return on investment.
The DSCR ratio is the gross rental income divided by the mortgage loan payments; it identifies whether the property has enough cash flow to honor the debt obligations of the investor.
For example, if your property makes $2,500 a month, but your PITIA (principal, interest, taxes, insurance, and association dues) is a combined $2,000 a month, you would have a DSCR of 1.25, considered a good DSCR ratio.
You should strive for this 1.25 ratio by identifying good properties and charging reasonable rent, as most lenders will not work with investors with a DSCR of 1.2. In other words, you're unlikely to be approved if your annual gross rental income does not surpass the annual debt.
For DSCR loans, lenders want a loan-to-value ratio of 80% or lower, which means you must provide at least a 20% down payment. The more you can provide upfront, the lower your annual debt and, thus, the higher your rental income. As with other loans, you will need to pay closing costs, typically 3% to 6% of the total loan.
Check out some of Visio Lending's recently closed DSCR loans in Connecticut.