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Use DSCR Loans to Grow Your Rental Portfolio in Georgia

Real estate investors in Georgia 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.

 

Georgia 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.

 

Georgia 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.

 

Georgia 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.

 
 
 

Georgia Boasts a Strong Rental Market Due to High Quality of Life and a Growing Economy

There are many qualities that make Georgia attractive to investors, according to Roofstock. A growing economy, booming job market, high quality of life, and affordability are just some of the many appealing factors. In terms of the rental market, Georgia rents are increasing anywhere from 3-14% year-over-year, and 36% of the state’s housing units are renter-occupied, with single-family homes accounting for the largest share of housing units.


For investors looking to purchase rental properties in Georgia, here’s where Mashvisor recommends looking:

  • Marietta, GA: Not far from downtown Atlanta, Marietta offers investors an average monthly rental income of $1,850 and a 3.1% cash-on-cash return. The city is relatively affordable with a $428,518 median property price.
  • Sandy Springs, GA: Although Sandy Springs has a higher median property value of $580,875, it also has a higher average monthly rent of close to $3,000. Investors can take advantage of a 3.28% cash return
  • Peachtree City, GA: Peachtree was named one of Money.com’s best places to live in the U.S. It offers investors a $501,035 median property price, over $2,000 in average monthly rent, and a nearly 3% cash-on-cash return
 
 
 

Partner with Visio Lending for Your Georgia DSCR Loan

Whether you are looking to invest in long term or short-term rentals, you can count on Visio Lending to close your Georgia DSCR mortgage. We've closed over 500 rental loans in Georgia.

 

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