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Use DSCR Loans to Grow Your Rental Portfolio in Florida

Real estate investors in the Sunshine State are using debt service coverage ratio (DSCR) loans to expand their portfolios. DSCR is calculated by taking the monthly rental income and dividing it by the property's monthly expenses including principal, interest, taxes, insurance, and association dues (PITIA). The final debt service coverage ratio is essentially an indicator to the lender of a borrower's ability to repay their loan. Many lenders have a minimum DSCR of 1.2, which indicates positive cash flow.

DSCR loans are ideal for self-employed investors or investors with large portfolios. Their simplified approval process and loan terms are designed specifically for real estate investors. Let's take a closer look

 

Florida DSCR Loans Look at Cash Flow Rather than Personal Income

Traditional loans focus heavily on debt-to-income ratio (DTI) and require substantial documentation including pay stubs, bank statements and tax returns. Meeting debt-to-income ratio requirements can be tricky for investors with multiple mortgaged rentals. On the other hand, DSCR loans have qualifications based on a minimum credit score and are underwritten using the property's income potential.

 

Florida DSCR Loans Offer Flexible Terms and Fees

With a DSCR loan, borrowers can take advantage of full 30-year terms with no balloons. Most DSCR lenders will also have the optionality for interest only loans, rate buy- downs, prepayment penalty buy downs, and rate structure choices. It is great for investors to be able to tailor their DSCR loan program to meet their investment needs. For instance, investors planning to hold onto their rental property long term can choose a fixed rate and pay higher fees, while investors who might sell in the near future can select an ARM rate structure and buy down their prepayment penalty.

 

Florida DSCR Loans Have More Flexible Common Sense Limitations on Number of Mortgaged Properties

For the professional investor looking to build a large real estate portfolio, a DSCR program is ideal. Most traditional lenders max out borrowers at ten loans. Instead, when evaluating qualifications for a DSCR loan, lenders will use common sense to evaluate an investor's maximum credit exposure.


 
 
 

Florida’s Population is Growing, Drawing in More Tenants


In a post-Covid era, Mashvisor found people are moving to Florida at a rapid pace to take advantage of the warm climate and natural scenery. This work-from-anywhere ideology not only brings an average of 849 individuals to Florida daily, but it also increases the demand for SFR rentals in the state. If you’re looking for a rental property in Florida, here’s where Mashvisor recommends you look:

  • Palm Springs, FL: Palm Springs offers real estate investors a great entry point with a little over $200,000 median property price. The average monthly rent of $1,414 provides nearly a 4.5% cash return.
  • Willington, FL: This Florida town boasts an average monthly rental income of close to $4,000, yet an affordable median property price at under $130,000. Consider Wellington for your next Florida real estate investment, and enjoy a 3% Cash return.
  • Port Charlotte, FL: Even though this town has a slightly higher median property price at just over $450,000, it still has a fantastic cash return at nearly 4%. Plus, renters pay an average of $1,952 per month.
 
 
 

Partner with Visio Lending for Your Florida DSCR Loan

Whether you are looking to invest in long term or short-term rentals, you can count on Visio Lending to close your Florida DSCR mortgage. We've closed over 1,000 loans in Florida totaling over $250M.

 

Contact Us to Start Your Loan

 
 
 

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Tell The Reader More

The headline and subheader tells us what you're offering, and the form header closes the deal. Over here you can explain why your offer is so great it's worth filling out a form for.

Remember:

  • Bullets are great
  • For spelling out benefits and
  • Turning visitors into leads.