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Texas DSCR Loan Interest Rates
According to the loan documents software company, Lightning Docs, the average interest rate for Texas DSCR long-term rental loans in the 4th quarter of 2023 was 8.55%. The average loan amount was $235,387. These stats are the average of 216 loans funded for residential rental properties in Texas between October 1, 2023 and December 31, 2023 by multiple lenders that use Lightning Docs as their preferred software provider to prepare loan documents.
Funded DSCR Long-Term Rental Loans in Texas
RCN Capital, a national direct private lender, funded a $160,000 1st lien position equity cash-out loan secured by a single-family rental home in Corpus Christi, TX. The property value was appraised at $235,000 so our loan-to-value was 68%. The subject property received a monthly rent of $2,115 where the market rate per the appraiser’s estimate was $1,600. The Sponsor on the loan had good credit with a mid-score of 756 and bank statements that reflected sufficient funds to meet our reserve requirement. The subject property was in good condition and tenant-occupied at closing. It is approximately 1,302 square feet. The interest rate was fixed at 7.91% with amortized payments, and we charged 2% origination points. The debt service coverage ratio was 1.10. The loan term was set at 30 years. This DSCR equity cash-out refinance loan was funded in January 2024.
RCN Capital, a national direct private lender, funded a $700,000 1st lien position equity cash-out loan secured by a portfolio of 4 single-family rentals in Cleveland, Texas, a small town Northeast of the Houston metro area. The value of all 4 homes was estimated at $1,000,000 so our loan-to-value was 70%. The Borrower was extremely experienced with real estate investing (completed over 1,600 flips). The 4 houses are currently leased for $1,595 per month each, which was below the market rate per the appraiser’s estimate of $1,725. The properties were each appraised for $250,000 As-Is for a combined $1,000,000 and CDA’s (collateral desktop analysis) were ordered to confirm the appraised values. The Sponsor on the loan had a mid-score of 800 and bank statements that reflected sufficient liquidity to meet the requirement. The DSCR was 1.10. The Borrowers have been doing this for 20 years. They have bought and sold over 1,800 properties and managed 1,800 units in Houston and Albuquerque, NM. The Borrower plans to continue renting the properties for the long term. The 4 homes were newly built and fully occupied at closing. The interest rate was fixed at 7.4%. The loan term was set at 30 years. This DSCR equity cash-out refinance loan was funded in July 2023.
RCN Capital, a national direct private lender, funded a $224,000 1st lien position equity cash-out loan secured by a single-family residence in Desoto, Texas. The property value was estimated at $320,000 so our loan-to-value was 70%. The Borrowers were looking to cash out refinance on the subject property which had an outstanding payoff of $202,003.13 and they wanted to hold for a long-term rental loan. We paid off the previous loan and provided the rest of the funds to the Borrower at closing. The subject property is a single-family rental home currently leased for $2,500 per month which was below the market rates per the appraiser’s estimate ($2,400). This resulted in a 1.11 DSCR. The property was appraised for $320,000 As-Is and a CDA (Collateral Desktop Analysis) confirmed the value was acceptable. Two Sponsors on the loan had excellent credit with mid-scores of 760. Bank statements reflected liquidity sufficient to meet the reserve requirement. The subject property was in excellent condition. It is approximately 2,164 square feet. The Borrower plans to continue leasing the property long-term. The interest rate was fixed at 6.84% and we charged 2% origination points. The loan term was set at 30 years. This DSCR refinance loan was funded in April 2023.
RCN Capital, a national direct private lender, funded a $198,949 1st lien position long-term rental loan for the acquisition of a single-family home in Waxahachie, TX. We funded 68% of the $292,000 purchase price, while the Borrower contributed 32% cash at closing. The subject property, approximately 1,773 square feet, was in excellent condition and was tenant-occupied at the time of closing. The tenant was paying market rent of $2,100/month which resulted in a 1.10 DSCR (debt service coverage ratio). It appraised at $295,000 as-is. The Borrower had a mid-FICO of 739 and bank statements that reflected sufficient assets to close the deal. The interest rate was fixed at 7.57% with amortized payments. We charged 2% origination points. The loan term was set at 30 years. This DSCR purchase loan was funded in April 2023.
RCN Capital, a national direct private lender, funded a $136,000 DSCR loan for the purchase of a single-family residence in Texas City, Texas. The experienced Borrower was under contract to acquire the subject property for $170,000 with intentions of holding it long-term as a rental/income property. The subject property was appraised for $230,000 as-is and the Collateral Desktop Analysis (CDA) Report confirmed that the value was acceptable, so the real LTV at the time was around 59%. The appraiser estimated the market rent to be $1,850/month which results in a 1.42 DSCR (debt service coverage ratio). RCN Capital funded 80% of the purchase in 1st lien position and the Borrower contributed 20% cash. The Borrower had excellent credit with mid-scores of 788 and bank statements showed evidence of sufficient assets to justify the loan. The fixed interest rate was 6.5% and the loan term was set at 30 years. We charged 3% origination points. The subject property is approximately 1,880 square feet on a 5,280 square foot lot. This DSCR rental purchase loan was funded in October 2022.
In the rising interest rate environment of 2022, many single-family rental investors looked for certainty. This Texas investor wanted to get cash out of the equity of his rental portfolio in Fort Worth, Dallas, and Burleson, Texas, but also wanted to lock in 2022’s rates for the long term. So he set out on a search for a fixed-rate, fully-amortizing 30-year loan as a cash-out refinance. The investor chose to partner with Lima One Capital in order to capitilize on the opportunity to lock in a fixed-rate over a full 30-year term. Most private lenders do not offer investors this kind of long-term interest rate security on cash-out refinances. Lima One’s team worked with the investor to optimize the portfolio makeup and maximize leverage, using the right mix of properties with qualifying debt-service coverage ratios to secure 75% on the cash-out refinance. Lima One’s in-house servicing team worked efficient and dynamic in ensuring the investor ended up with a loan that allowed him to continue to scale his portfolio and build his real estate empire. The subject property was in excellent condition and tenant-occupied at closing. The Borrower plans to continue leasing the property at the market and eventually refinance as an exit strategy. The loan term was set at 30 years. This rental portfolio refinance loan was funded in January 2022.