Author Showcase - October Edition

Introduction

• Host: Carl White
• Guest: Tom Davis (Fort Lauderdale, Florida)
• Focus: Discussion about DSCR loans (Debt Service Coverage Ratio loans) for investment properties.

Key Statistics

• Investment Properties: 26-27% of purchase transactions year-to-date are investment properties.
• Market Shift:
  • Five years ago, investment property transactions were lower.
  • Post-COVID migration led to increased buying of second homes and investment properties.

Market Overview

• Total Origination Market:
  • 2021: $4.4 trillion (72% refinance, 20% purchase)
  • 2023: $1.6 - $1.7 trillion (60% decline).
  • 75% of the market now consists of purchase transactions.
  • Investment properties make up 27% of purchase transactions.
  • Higher investment property rates noted in states like California (34%), Texas, and Georgia (low 30s).

Understanding DSCR Loans

• Definition:
  • Cash flow program where properties qualify based on the income they generate.
• Qualification Example:
  • If a property’s payment is $1,000 and rent is $1,200, the DSCR ratio is calculated as follows:
    • Rent / Payment = $1,200 / $1,000 = 1.2 (qualifies over 1).
• Borrower Qualifications:
  • No personal income verification required.
  • First-time and seasoned investors can qualify.

Target Market for DSCR Loans

• Potential Borrowers:
  • First-time investors and seasoned investors.
  • Loans can be structured under LLCs.
• Market Opportunities:
  • Over 19 million investment properties in the U.S.
  • Explore local real estate investment clubs (REIA) for networking.

Marketing Strategies

• Target Realtors:
  • Many realtors are investors themselves.
  • Lunch and learn sessions can help educate realtors and generate leads.
• Local Real Estate Investment Clubs:
  • Attend meetings for networking opportunities.

DSCR Loan Product Overview

• History:
  • DSCR loans have been around since 2012.
• Current Trends:
  • Increased attention due to the current economic climate.
  • Investors are capitalizing on cash flow properties amidst housing supply deficits.

Notable Markets for DSCR Loans

• High Demand Areas:
  • Coastal and major metropolitan areas (California, Florida, Georgia, Carolinas).
• Short-Term Rentals:
  • DSCR loans can be used for properties generating Airbnb income (with considerations based on property location).

Conclusion

• For more information, refer to Tom's article "Invest in Your Future" in the October edition of the Scotsman Guide.
• Additional resources available at Deep Haven Mortgage (deep-haven.com) including webinars and marketing materials.
• Encourage listeners to leave reviews and share the podcast.