This loan relies on the subject property's cash flow rather than the borrower's personal income or financial history; in other words, you don't need to provide a vast amount of personal information as you would with different loan types.
All you must prove is the property's ability to finance the loan, making it easy to add investment properties to your real estate portfolio and generate income immediately. You don't have to submit tax returns; you can buy under a corporation name, meaning your assets will not be tied to your real estate portfolio. This makes it a much better option for real estate deals than conventional loans, which must be underwritten under your name.
DSCR loans hinge on the debt service coverage ratio (DSCR) formula, which divides the property's cash flow by PITIA (principal, interest, taxes, insurance, and association dues). This way, it identifies whether your real estate investment will make or lose money.
One of the stipulations of DSCR loans is the prepayment penalty: if you make extra loan payments and close out your loan ahead of time, you will have to pay a percentage of the overall principal upfront. This protects the lender's interests while encouraging real estate investors to buy and hold.
You - and your investment properties - need to meet a few particular stipulations to be approved for DSCR loans:
The entire Kansas market is powerful at the moment, but some areas are of particular interest to real estate investors. By choosing rental properties in these regions, you can steadily generate income from your real estate investments to grow your portfolio to new heights.
With a twin city across the border in Missouri, Kansas City is unique, as is its real estate market. Over both sides of the city, home prices have risen 11.6% in recent years, and major industries have made their home as of late, including manufacturing, healthcare, animal care, and finance, which means well-heeled tenants willing to pay a premium for good rental properties.
The average rental income in the city for apartments is $1,220, while commercial real estate investments make around $21.74.
With a vibrant downtown and a bustling cultural district, Lawrence has much to offer residents, making a real estate investment in this town a natural choice. Lawrence's average residential rental income is $1,111; meanwhile, the commercial rent is approximately $20.39 per square foot. These excellent statistics align with much larger cities and given that housing prices are up 5.6% in 2023, they will only improve from here.
Prairie Village is a suburb of Kansas City; this cozy city is an upmarket option for those seeking high-end real estate investments. Last year, this little-known gem was Zillow's best market, proving there's great value in pursuing investment properties in the Midwest and Great Plains.
The numbers speak for themselves. Despite having less than a quarter of the population, Prairie Village commands higher rents in all sectors. You can expect to make an average of $1,688 monthly for residential rental properties; for commercial spaces, the rent is around $22.37 per square foot.
Affordable housing and excellent schools draw residents across Kansas and beyond to settle in this charming small town. You can expect an average rent of about $967 per month for residential rental properties; in contrast, commercial spaces make around $15.00 per square foot. This may seem relatively small compared to other areas on this list, but Spring Hill's population has been growing steadily at around 5.5% per year, meaning that a long-term real estate investment will pay off nicely over time.
Visio has helped thousands of investors build a robust real estate portfolio nationwide, with over 14,000 deals closed nationally. We don't need an in-depth financial history, focusing solely on your property's ability to generate sufficient cash flow rather than your own personal income.
In addition, we provide full 30-year terms with no balloons, ensuring that you can generate income over time rather than worrying about your loan payments.
As one of the premier DSCR lenders in Kansas, we welcome you to get in touch and learn more about our seamless process for DSCR loans, which will help break you into this strong real estate market far sooner than you'd ever expect.
Check out some of Visio Lending's recently closed DSCR loans in Kansas.
Wichita, KS
Kansas City, KS
Kansas City, KS
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Visio Lending is the nation's premier lender for buy and hold investors offering, long-term loans for SFR rental properties, including vacation rentals.