Easily Qualify For Any Purchase

The Wisdom, Lifestyle, Money, Show

Summary

This podcast episode, "Easily Qualify For Any Purchase," focuses on alternative mortgage financing options for real estate investors in Canada and the United States. The host, Scott Dillingham, explains how investors can qualify for mortgages based on a property's cash flow rather than solely relying on personal income and debt-to-income ratios. The core concepts discussed are the Debt Coverage Ratio (DCR) in Canada and the Debt Service Coverage Ratio (DSCR) in the US, which allow lenders to evaluate a property's ability to cover its mortgage payments. The podcast highlights the differences between traditional lending and these property-based lending programs and the nuances of these programs in each country. It emphasizes the importance of understanding these options for investors looking to grow their real estate portfolios and potentially retire from their 9-5 jobs. The episode also touches on how to analyze the cash flow of a property using specific expenses like property taxes, insurance, and condo or homeowners association fees. The host also mentions that these programs can be a way to access unlimited lending once the investor is in the program. The episode also promotes a Real Estate Investor Hub for those looking to further their real estate education.

• (00:00) - Introduction to the Wisdom Lifestyle Money Show
• (00:44) - Understanding Mortgage Qualification
• (01:26) - Equity Lending and Private Mortgages
• (02:36) - Debt Coverage Ratio (DCR) and Debt Service Coverage Ratio (DSCR)
• (02:48) - Commercial vs. Residential Lending
• (04:28) - Loan to Value (LTV) Differences Between Canada and the USA
• (05:32) - Navigating the DSCR Program in the USA
• (07:58) - Cashflow and Loan Underwriting
• (09:15) - Running the Numbers and Unlimited Lending
• (11:19) - Conclusion and Call to Action

If you're serious about real estate investing, join our free Investors Hub. Click this link to access now.

Key Takeaways

• Alternative Financing: Investors can qualify for mortgages using the Debt Coverage Ratio (DCR) in Canada and the Debt Service Coverage Ratio (DSCR) in the US, focusing on a property's cash flow rather than personal income.
• DCR/DSCR Explained: These ratios assess if a property's rental income can cover its mortgage payments. The loan can be approved if the income is sufficient, even if the investor's personal income doesn't meet traditional requirements.
• Canada vs. US Differences:
  • Stress Test: Canada has a stress test requiring borrowers to qualify at a rate 2% or more higher than their actual rate. The US does not have this.
  • Loan-to-Value (LTV): Canada generally offers up to 80% LTV, while the US is typically 75% on purchases and 65% on refinances.
  • Interest-Only Mortgages: The US offers interest-only mortgages, which can impact the DSCR calculation.
  • Mixed-Use Properties: Mixed-use properties are generally acceptable in Canada's DCR program but can be challenging in the US's DSCR program.
• Cash Flow Analysis: Canada factors in expenses like vacancy and repairs, while the US may exclude these for the DSCR calculation.
• Fees: Both commercial loans in Canada and DSCR loans in the US involve fees that vary depending on loan size, complexity, and closing time.
• Underwriting Styles: Commercial loans in Canada and DSCR loans in the US have different underwriting styles that need to be navigated by experts.
• Lending Caps: In the US, lenders may have caps on the number of loans they will fund and may sell the debt. In Canada, caps are less common, and there are often options to partner with other lenders.
• Unlimited Lending: Once in the program and if properties continue to cash flow, lending generally becomes unlimited.
• Private Mortgages: Many investors unaware of DCR/DSCR programs may end up with private mortgages with higher rates and fees.
• Expert Advice: It is important to seek expert advice to determine the best strategy for your investment goals.
• Foreign National Considerations: Foreign nationals investing in the US may face different LTV restrictions.
• The BRRR Method: The BRRR method may not be as successful in the US due to lower LTVs on refinances.
• Single-Family Homes: Lenders usually prefer two-unit or larger properties, but the DCR program can be used for single-family homes in Canada.
• Real Estate Investor Hub: A resource is available offering real estate investing courses, networking, webinars, and access to unique properties.

In short, the podcast educates listeners on using property-based lending programs to expand their real estate portfolios. It emphasizes the need to understand the nuances of these programs in Canada and the US to achieve financial success in real estate investing.

If you're looking to access the best financing for Real Estate Investors in Canada & the U.S.A., then I suggest you Book A Free Strategy Call with a specialist on my team.