Virginia DSCR Loans allow borrowers to access a rich and varied real estate landscape. Virginia has something for everyone, from pristine rural getaways to bustling, lively urban centers in Northern Virginia. Due diligence, timely decision-making, and strategic planning can turn a beginning real estate portfolio into a lucrative endeavor.
According to Forbes, Virginia real estate is a solid investment. The state is conveniently located near Washington D.C. but also features coastal areas, rich and historic cities like Richmond, gorgeous retreats like the 140-mile stretch along Shenandoah Valley, and more.
The Virginia market has been a seller's boon, but it is slowly balancing between buyers and sellers. However, there is no sign of a crash in the near future. Virginia investors can count on a steady market for the foreseeable future.
Take some time to fall in love with the state, and you'll invigorate your drive to build a firm real estate portfolio and make your properties the best rentals around. A DSCR loan in Virginia can help.
Virginia's coastal economy is home to several tourist hubs, like Williamsburg, and job opportunities. In fact, Virginia hosts the only shipbuilding company responsible for the US Navy's nuclear-powered aircraft carriers. The large workforce helps stabilize the local economy, while attractions pull in tourists of all ages, and students of the many higher education facilities in the state provide a constant demand for short-term rentals.
The more you know about the area your investment or rental property is in, the better you can estimate if you qualify for a DSCR loan.
Virginia's laws offer a balanced approach to protecting landlords and tenants, with several regulations to help landlords manage their property. Security deposits can equal two months of rent, and landlords don't have to pay interest on the deposits.
There are specific disclosures landlords are responsible for providing regarding the value and safety of a property.
Virginia has a low property tax rate, averaging 0.86% compared to the national 1.1%. The corporate income tax is only 6% as well, saving you a decent amount of money over the life of your DSCR loan.
Virginia also offers the Land Preservation Tax Credit program and Opportunity Zones that offer tax incentives to investors for investing in distressed communities.
Lastly, Virginia is one of the only remaining states that allow capital gains tax to be deferred through a 1031 exchange.
Redfin Data reveals a shifting market with overall improvements. Demand is only down 0.88 points, and the three-year trends show an overall rise. Supply, however, has been steadily declining, with only 2-months' worth in the current market. As a result, the median sale price is going up.
Zillow data analysis reveals the average home value in Virginia is $372,943, boasting a 3% increase over the past year. Their Market Overview goes on to report:
Virginia DSCR Loans can finance (or refinance) most residential retail and commercial properties. You can determine what type of property to finance by exploring the area you want the property to be in.
City hubs like Richmond can always benefit from new office buildings, while areas like Charlottesville see residents willing to spend good money for a single-family residence.
A DSCR loan can be used on short and long-term rentals, so Virginia investors have their choice of rental properties that can help generate excellent rental income.
DSCR loans in Virginia are more streamlined and easier to qualify for than conventional loans. They only require a minimum credit score of around 640 and an estimated or current minimum DSCR of 1.25x; in other words, if your rental properties can generate enough cash flow to cover your loan payment, it's highly likely that you'll qualify for the financing you need.
The Virginia DSCR loan process is far simpler than other loan types, which is why it's so well respected by investors. To secure a conventional loan, lenders have strict regulations regarding personal income verification. Since many investors have complicated income streams and tax returns, gathering the necessary documents can be a hassle; many borrowers, like self-employed workers, may not even qualify due to these stipulations.
Instead, DSCR lenders use a property's potential cash flow by estimating rental income and debt expenses like insurance to calculate eligibility— previous successful property management is a plus. A higher DSCR can lead to better loan terms like the minimum monthly payment.
A DSCR lender can also offer higher loan amounts than traditional mortgages. The extended loan period also offers lower payments, helping investors improve their DSCR even as they reinvest the cash. It's clear that Virginia DSCR loans are a winning choice for those seeking to boost their cash flow through rental property.
The debt service coverage ratio takes a property's income and divides it by annual debts. If you already have investment properties, you can use your current DSCR to apply. If this is your first investment loan, the lender will estimate DSCR based on the local market.
The median rent in Virginia is $1,978, but looking at the whole state doesn't provide data accurate enough for investors to estimate potential DSCR. Instead, borrowers should look at the median rent and selling price for the city in which they wish to invest.
Virginia has a high percentage of renters, with some neighborhoods seeing renters account for up to 60% of households in 2020.
With many popular (and populated) cities across Virginia, it can be difficult to decide where to invest. Clever has analyzed investment markets across the state to pick the five best cities for investment:
Check out some of Visio Lending's recently closed DSCR loans in Virginia.
Richmond, VA
Charlottesville, VA
Virginia Beach, VA
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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.