Scott Craft - DSCR Loans Explained, The Rental Property Loan Every Real Estate Investor Should Understand | Real Estate Educators Podcast with Kevin Amolsch

Description

Looking to finance rental properties without relying on your personal income or tax returns? A DSCR loan (Debt Service Coverage Ratio loan) could be the financing solution you've been looking for. Unlike conventional mortgages, DSCR loans primarily qualify borrowers based on the rental property's income rather than their personal income, making them an option for real estate investors looking to build or expand their portfolios.

In this episode of the Real Estate Educators Podcast, Kevin Amolsch sits down with Pine Financial Group Loan Officer Scott Craft to break down how DSCR loans work, how lenders evaluate rental income, and what investors need to know about qualifying. They discuss everything from DSCR ratios and loan-to-value requirements to credit scores, appraisals, interest rates, and prepayment penalties.

Kevin and Scott also explore four ways investors can use DSCR financing: acquiring multiple rental properties, refinancing a completed BRRRR project into long-term financing, converting a fix-and-flip that isn't selling into a rental property, and accessing existing equity through a cash-out refinance. Scott explains how the right financing strategy can help investors preserve capital, manage holding costs, and create more flexibility in their portfolios.

Of course, not every DSCR loan is the same. Scott explains why different lenders have different qualification requirements, how prepayment penalties can affect interest rates, and why some programs may allow a DSCR below 1.0. Kevin and Scott also discuss the importance of understanding actual property expenses and cash flow before taking on additional debt.

Whether you're purchasing your first rental, growing an established portfolio, or looking for an alternative to short-term hard money financing, this episode will help you understand when a DSCR loan might make sense and how Pine Financial Group can help you explore your options.

00:00 – Scott's background in real estate investing and lending

02:35 – What is a DSCR loan?

07:45 – Understanding the debt service coverage ratio

13:05 – Who benefits most from DSCR financing?

14:35 – Using DSCR loans to grow a rental portfolio

16:05 – Refinancing BRRRR projects into long-term loans

22:25 – Understanding DSCR loan prepayment penalties

27:05 – How DSCR interest rates are determined

31:10 – Four ways investors can use DSCR loans

Connect with Scott Craft

Scott Craft is a Loan Officer with Pine Financial Group, helping real estate investors find financing solutions for acquisitions, renovations, refinances, and long-term rental investments.

Email: scott@pinefinancialgroup.com

Website: www.pinefinancialgroup.com

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Yeah, so DSCR stands for Debt Service Coverage Ratio, and it's really, it's just a different type of loan. So it's a long-term loan. That's primarily how it differs from a hard money short-term loan. The ideal borrower for this would be that person that we talked about who maybe has some properties that are not selling right now and needs to get out of a higher interest short-term loan.
Speaker #1
For the listener, if you have like Smaller properties have 30-year fixed on them. Now, if you're at 3% or 4%, you probably leave that alone. But if it's at a higher interest rate, it might make sense to refinance that property into a DSCR so you could free up room under the conventional guidelines to go out and finance a larger property.
Speaker #0
We were in negotiations. We're investing in real estate. They're winning. They're making money.
Speaker #1
Hey, hey, it's Kevin Amalsh, Pine Financial Group, where we work together so you succeed. Hey, you found us here on Facebook. You found us here on YouTube. Help us out. We're trying to build a channel to help more real estate investors just like you. You can help us out by subscribing, liking, leaving us some comments below. I have a very cool special guest with us today. You all know him, Mr. Scott Kraft. Welcome.
Speaker #0
Thank you, Kevin. Happy to be here again.
Speaker #1
It's been a little while. Yeah. So because it's been a little while, why don't we back up and in case they don't know who you are, tell us a little bit about yourself.
Speaker #0
Yeah, absolutely. So, um... My name is Scott Kraft. I am a loan officer here at Pine. I've been working in real estate investment full-time really since 2010. I've had my hand in a lot of different things over the years, being, you know, from buying rental properties to doing fix and flips to doing some minor developments of small single-family homes or duplexes. I've had my real estate license for almost 15 years now, and I've been with Pine from coming up on just under five years right now. It's been awesome. I love helping people achieve their real estate goals and crafting some loans to really help people get things done. This is just a dream job. So happy to be here and happy to talk about some DSCRs with you today.
Speaker #1
You love crafting deals. I see what you did there.
Speaker #0
Yeah, you like that?
Speaker #1
All right, Scott Craft. We're going to talk about DSCR. You obviously have a ton of experience. This is a newer product for Pine Financial. We've always wanted to stay really narrow in our lane and the fix and flip and value add lending. But this product has been quite popular and it's really helping real estate investors out accomplishing their goals. So we decided to bring it on in-house. So let's start with what is DSCR?
Speaker #0
Yeah, so DSCR stands for Debt Service Coverage Ratio. And it's really, it's just a different type of loan. So it's a long-term loan. That's primarily how it differs from a hard money short-term loan. But it's, I would compare it most to a conventional loan. However, The difference is in how you qualify a specific loan for approval, right? So debt service coverage ratio, if you break this down, what is your debt service, right? That's your monthly mortgage payment. And if we're talking about debt service coverage, that's talking about, well, does the income cover the debt service. And so what a DSCR loan looks at... is the property's ability to cover its own debt service. So a DSCR, instead of looking at your personal income on paper, looks at the property's rental income as the primary qualifier, or if it makes financial sense for the lender to approve that loan.
Speaker #1
Okay. So it's sort of sounding like a stated income loan from back in the day.
Speaker #0
Different. Yes. So it's definitely not stated income. Now, the biggest way that it differs from that is, number one, there is still tons of documentation that goes along with getting approved for a DSCR. Really, the one thing that's not included is your tax returns. And there might be some DSCR lenders out there that do still want to see that. But the biggest thing is we're looking at the property's rental income. And one of the biggest documents that verifies what that income is, so it's not just stated, is a lease. If you have the property rented... we can see what it's going to bring in every month. And so it's not exactly a stated income level.
Speaker #1
And I hear people talk about the looming recession and what's ahead of us, Scott. And you and I talk about this sometimes. And I said the stated income sort of as a joke, but it is a non-conventional, almost like... Non-QM. Is that the term I'm looking for? It's like a non-QM loan. Qualified mortgage is what that term means now. And that all came out of the 2008 crash. So I don't think we're going back necessarily to that time, but it is a shift in that direction. Am I wrong?
Speaker #0
No, I would tend to agree with that. Yeah. I mean, it's a different thing. And these are not loans that are backed by Fannie or Freddie. That's another big differentiator between these. what was happening back in 2008. So this is private money, big institutional investors come in and they back these loans.
Speaker #1
And there's still the ability to repay requirement, which also came out of the Dodd-Frank from 2008. But the ability to repay is not you personally, right? The difference is that's now it's the property's ability.
Speaker #0
Absolutely. Yeah. Again, we're looking at what that rental property can bring in an income compared to what you're paying out to cover the debt.
Speaker #1
Okay, cool. So I guess let's get into it. How do I qualify? What's the ratio, the DSCR ratio? What other factors are you looking at?
Speaker #0
Yeah. So lots of different lenders are going to have lots of different programs. For instance, The loans that we originate, we work with three to four different capital partners that provide the liquidity for us to do these loans. And each one of them have their own different set of requirements. So I believe depending on the type of property, you might need to see at least a 1.2 DSCR, whereas we have others where they can go down to a 0.75. And just to put that in layman's What that means is If you've got a 1.2 DSCR ratio, that means that for every dollar you're spending in mortgage payments to the lender, you're bringing in $1.20 in income. Okay, so positive 1.0 means you're making money every month, excluding repairs, broken furnaces, that sort of thing. It doesn't take that into consideration, just the income versus what you're paying out as a mortgage payment. but As I was saying, we have some people that can go down to as low as a 0.75. So what that means is that the income you're bringing in every month is 75% of what you're sending out every month to your lender. So you're losing money every single month. Now, there are a lot of DSCR lenders who would not even look at that. That's a hard stop for them. But there are others that will do that. So it's... It's such a wide gamut. And that's why I would recommend that anyone who is looking for a DSCR talks to a lender that has a lot of different options for you because there's so much variation in the different programs, right? But generally, what they're looking for is there is an appraisal, right? It's still a loan. Lender has to know what the house is worth based on a comparable sales method of valuation. They want to see a lease, right? Because that's what they're going to be basing the DSCR calculation on. That's not to say that you can't get a DSCR done even if it's not fully leased. But typically there's other stipulations that come along with that. But they're doing an appraisal where they not only value the home, but also the rental rate. What's the market rate for that house in that neighborhood? They are looking at your credits. We're interested in the level of experience that you have. You know, it's really almost just like a full doc loan minus your taxes, minus your personal income tax return.
Speaker #1
So it's a great product for someone who writes off everything. I'm thinking of like contractors or as you are, real estate agents, they tend to show very little income, right? Even though they're making a lot of money. That's the perfect borrower for this, it sounds like.
Speaker #0
Yeah, there's a number of different people that I think this suits so well. You know, like you mentioned, people... People who work in real estate, they might have really good years. They might have a year where they bought a house at the very beginning of the year, and they might not have it sold by the end of the year. So maybe they show almost zero income or net negative income for that year. And if they're relying on that income to qualify for a long-term loan, well, a conventional lender is not going to like that at all, right? So. We have borrowers whose income will vary year by year. Some years are great, some are bad. So this is a way to circumvent the issue that that creates, okay? It's also great for people who are just getting into the business and wanting to really scale their rental portfolios quickly, right? Because again, you might not have the income necessary to show X, Y, and Z income.
Speaker #1
From your W-2 or from your 1099.
Speaker #0
Yeah, exactly. Yeah. So again, if your income varies or if you're trying to buy multiple properties over a short period of time, you might not have the necessary income to hit that DTI that a conventional lender would be looking for. But if you can just take each individual property that you're buying and use the income from those, well, all of a sudden you can use this product to really scale quickly.
Speaker #1
That's really a... I didn't think about that, Scott, but that's really very accurate. So if we're looking at a case study and we wanted to help the listener understand like when would you use it, when would you not? I mean that's a perfect example. If you're trying to scale I mean there's rapid acquisition requirements in conventional lending oftentimes. Obviously, your debt-to-income you said DTI. That's debt-to-income ratio. That's impacted. Every property you buy, they're only taking 75% of the gross income and counting it towards your income. So until you could show leases and your expenses from your tax returns, you're limited to 75% of the gross on a conventional lender. This is quite different, and that is a perfect case study for when someone would want to use it. Are there any other great case studies?
Speaker #0
Yeah, well, you mentioned case study. The last person that I closed a DSCR for was actually exactly that person. He was a young guy getting started out in his real estate journey. And, you know, I think he picked up something like four to five rental properties within the last year. And he's been using this DSCR product to help qualify and be able to get that accomplished. Yeah. Who else? I mean, BRRRR investors. Let's say, you know, if you're... If you have only a limited amount of cash available to you, but some to play with, you can go to a company like Pine, get a hard money loan for short term, nine months to rehab the property, get that value increase, and then go on to the DSCR lender. We could just refinance you right into that long-term loan. And that increase in the equity in your property becomes your down payment on a 75% LTV DSCR. And you just take, you know, get your cash back, move on to the next one and just keep doing this over and over again. Another another really and this one's actually very pertinent right now. Another really helpful time that or another time that these loans can be very helpful is let's say you're a fix and flipper and you're in a hard money loan right now and you've got the property all finished. It's beautiful, but. In certain markets around the country, real estate is very slow right now. So you might not be selling it for what you expected to. And a great option to get out of that hard money loan is to go into a just pivot, turn that into a rental property, go into a long-term loan, and wait until the market turns around and adjusts for you to be able to sell that.
Speaker #1
We're seeing that like almost every... day. Like which of these, which of our borrowers would benefit more from dropping the price on their property and just getting out of it or refinancing it into a DSCR and live to fight another day. Like maybe a year or two from now, the market's different. It's easier to sell, but we are absolutely seeing that. So that's a great one. This episode is brought to you by Pine Financial Group. Pine Financial is a private lender specializing in short-term rehab lending to real estate investors. Got a property that needs some love? We can help. We are able to offer funding solutions because we raise private money from individual investors. With more than 15 years of experience, Pine offers passive investors an alternative that provides stability, consistency, and security to your portfolio. If you like real estate but want to avoid the ups and downs in effort, a Pine Mortgage Fund could be a perfect fit for you. Accredited investors will experience an 8% preferred return and profit sharing. diversify your portfolio. out of Wall Street and into Main Street with a Pine Financial Group fund. To get more information at pinefinancialgroup.com, that's pinefinancialgroup.com. While you think about that, I'm going to come back to the DSCR term. It's such a weird name, Scott, for a loan because what it actually stands for is a ratio, which is a guideline in commercial lending. So on the commercial side so just take a step back so the listener understands. On the commercial side, they qualify the property, not the borrower. I mean they look at globally, but in general, they look at the property. And as you alluded to earlier, Scott, they want to see a 1.2 or higher DSCR, debt service coverage ratio, to qualify for that commercial loan. It would be really rare to have a commercial lender under 1.2. Now, you do see that sometimes with owner-user commercial properties and that sort of thing, but it would be pretty unusual. And here's the point I want to make. That is based on a... NOI or net operating income. So you take your gross, you subtract all your expenses, including your vacancies, and then you still have to hit a 1.2 to qualify for the loan. The residential, they just call it DSCR. Again, I think that's strange, but it's based on gross. So help us as a listener understand the difference there and why that's so powerful.
Speaker #0
Yeah. So the difference there, when you're talking about NOI versus gross, there's a all kinds of expenses that are not being taken into consideration on that DSCR calculation, right? So you're not taking into consideration vacancy, right? If you have the property leased right now, they call it good. They don't have any further stipulations, but you might have a vacancy come up and they build that into an NOI calculation, right? Same thing with repairs. Furnace breaks, hot water heater breaks, you have a water leak, all kinds of additional expenses that you're going to face. And we all know you're going to have these expenses as a landlord. But again, for the purposes of a DSCR qualification, they just don't take that into consideration. Isn't that crazy? I mean, it's great for the borrower.
Speaker #1
Yeah.
Speaker #0
Yeah.
Speaker #1
I mean, if you really need... I know. Sometimes you want to, this has your strategy. We haven't even talked about interest rates yet. They're very competitive. But sometimes, I mean, they're going into a 0.75 DSCR. That's a little scary. Now, I think it's good if you need it, but I guess caution. What are your thoughts?
Speaker #0
Yeah, I would definitely say caution. I would not recommend this for someone who's in a great position, just trying to build up their rental portfolio. you're getting into these high leverage DSCRs where you're losing money every month. I would not recommend it for that person. The ideal borrower for this would be that person that we talked about who maybe has some properties that are not selling right now and needs to get out of a higher interest short-term loan to get something more stable where the bleeding is less severe, right? And they can hold on longer until the market turns around.
Speaker #1
Yeah. As long as there's a strategy to cover that shortfall and you have the ability to do it, it could work really well. Now, before we get into rates, talk to me about prepayment penalties, because I know that they do exist in this space, which is not common in the conventional world.
Speaker #0
Right. Yeah. So prepayment penalty, again, what this alludes to is you'll have something, whether it's one year, maybe up to five years, where if you pay back that loan, You either sell the house or you refinance the DSCR. You're going to owe your lender a pre-specified amount. Okay, it could be one point, could be two, could be up to five points, depending on how quickly it is and how the loan was set up. The reason for this is these big institutional investors that are backing these loans, they don't make their money on turnover like us as hard money short-term lenders do. They make their money by taking cash, lending it out. They don't want to touch it. They just want to receive their interest every single month. Okay. And again, since these are not consumer loans and they're business purpose only, I think that it's easier for lenders to impose that type of requirement. You know?
Speaker #1
Yeah. So there's a trade-off, right? If I understand this right. You're the expert, but I think I got this right. If I go a longer prepayment, if I'm going to agree to that, then I might get a break on my interest rate. Is that the tradeoff?
Speaker #0
Yes, that is. Absolutely. So there's a lot of different ways that you can kind of massage an interest rate when you're going through the. the pricing process for a loan. So if you know you're going to hold this property, you have no intention of refinancing it or selling it within the next three to five years, it's very easy to get a break on that interest rate. But if you're telling the lender, hey, I'm only comfortable paying a one-year prepayment penalty. I'm only confident that I'm going to hold this loan for one year. They're going to charge you more on the interest rate. to make up for that risk of potentially getting their money back and having to redeploy it.
Speaker #1
Yeah. So that's all about the strategy. And I guess working with someone like you, a professional that understands this and that understands the different products, we work with different lenders. And so you shop around and try to find the exact right loan for a specific purpose or goal. So I think that's important to point out.
Speaker #0
Yeah. That's when, you know, when I'm talking to somebody, who's coming to me and says, hey, I think I want a DSCR for this property. One of my most important questions is what are you most trying to accomplish with this? Do you want the highest leverage? Do you want the lowest interest rate with the lowest fees? What are you thinking about a prepayment penalty? Do you intend to sell this or refinance it sometime in the near future? Because those are all questions that you can really use to move around the different terms of that loan product. to make sure that they're getting in the best possible loan for them.
Speaker #1
And even take it, I know you're getting to this, but the one step past that is like, what's the ultimate goal? Are you trying to build a portfolio? Are you trying to hit a much like payoff alone? That's hitting a maturity deadline. Are you just trying to stop bleeding? Like there's different goals, right? And then from there, it's like, do you want the lowest interest rate? Do you want the shortest prepayment penalty? Like, and so you craft it. with the ultimate goal in mind, right?
Speaker #0
Yeah, exactly. And another type of person that this product is great for that I was trying to remember earlier, but just couldn't put my finger on is someone who potentially they have a ton of equity in a house, right? Let's say they have a rental property that's free and clear or has significant amount of equity in it. It's easy for them to go to a DSCR lender and say, hey, I need to pull some equity out. I need to turn this into cash to go out and do another deal or whatever opportunity they have in front of them at any point in time. DSCR lenders can do cash outs. So that's a great tool for people to be able to utilize their equity.
Speaker #1
There's so many options with this tool. And it's just like we say with hard money loans, people say, oh, your interest rates are so high, blah, blah, blah. Well, cool. Then don't borrow at one, but two, it's just a tool. I mean, you pull out a hammer to hit in a nail. You don't pull out a hammer to hit in a screw, right? So you have to have the right tool for what you're trying to accomplish. That's all this is.
Speaker #0
Exactly. It's just another arrow in the quiver, you know?
Speaker #1
Exactly.
Speaker #0
And it's just like when you're rehabbing a property, you have to pay your contractor. I mean, I would love to get a house rehabbed without having to pay a contractor. Exactly. It just doesn't work like that.
Speaker #1
Well, if you do it yourself and it takes you a year to do it, then you'll pay the lender in interest instead of the contractor. That's a whole nother podcast episode. Let's talk about interest rates because I know they're pretty competitive. So tell me about that.
Speaker #0
Yeah, so that's another thing that can really vary greatly between lenders, between even our capital partners. We have some that are more expensive, some that are cheaper, but the trade-offs are in maybe a higher, they're more expensive, but they'll go down to a lower DSCR or a higher LTV, something like that. So interest rates, unlike... hours at Pine, they are much more heavily determined by the general macroeconomic conditions out there, very much like your home mortgage, right? So say you're buying a new house, you go to your lender, say, hey, I need to get a new mortgage. I'm buying this house. They say, great, here's where interest rates are right now. So these move daily. It could be. I mean, they might stay stagnant for a few days here and there, but they could just jump. They could come down. It's constantly moving.
Speaker #1
Okay. So I like that answer. And how do they compare to conventional?
Speaker #0
They're going to be higher.
Speaker #1
They are higher. Because sometimes I've seen it where they've actually been lower in some examples.
Speaker #0
That's interesting. But yeah, I think by and large, generally, they're going to be higher. Because again, this is a specialized product. They have to be- That makes sense. Now they have to be comparable. They can't just be outrageously higher than a conventional loan because a lot of these people are mentioning that- would benefit from a DSCR, they could also go conventional. Maybe a lot of them can't, but certainly a portion of them can. So they have to incentivize people to go this route versus conventional.
Speaker #1
So if I'm thinking about a debt strategy for my own personal portfolio, Scott, and I'm oversimplifying this, but I'm just curious if I have this right. So if I want my Thank you. 30-year fixed money to maximize that out. So I have restrictions on how many properties I could finance and there's that sort of thing. But if I have a little tiny condo, for example, or a larger fourplex, I'd rather put the debt on the fourplex, right? So I want to max out my leverage on the 30-year conventional. From there, I would go into DSCR. That would be the next best loan to get. And once I max that out, or if I'm... Not able to get that. Then I might go to a bank and get like some portfolio loan or something like that. That's where my mind is sort of thinking. And then obviously private capital and that whole world would be the last resort to me. Am I thinking about this right?
Speaker #0
I think that all makes sense. Yeah. If you have the ability, if you can show the income to max out what a conventional lender will give you, I would do that because it's a little cheaper. Might be slightly more of a headache, but... would, I would think would be cheaper. And then yeah, move, move on down the line like that. DSCR would definitely be the next best option.
Speaker #1
Definitely in the strategy. Yeah. So for, for the listener, if you have like smaller properties that have 30 year fixed on them. Now, if you're at 3% or 4%, you probably leave that alone. But if it's at a higher interest rate, it might make sense to refinance that property into a DSCR. So you could free up room in the, under the conventional guidelines to go out and finance a larger property. I'm just kind of brainstorming out loud, but that's where my mind goes when I'm hearing you talk about this loan. All right. So anything else you'd like to share about the DSCR with our audience?
Speaker #0
You know, I think the biggest takeaway is a DSCR is such a moldable tool that fits so many different unique opportunities. again It could be you're in buying mode. You want to scale quickly. It could be you're doing a BRRRR strategy one by one. It could be you're a hard money or you're a fix and flipper who's run into some trouble. Could be you have equity and you're trying to find the cash to go do the next purchase. There's so many different uses for this. And again, us as the lender, we have the ability to really massage that loan. to mold to exactly what suits your situation the best. So, you know, if you think that this is something that you might benefit from, given any of those situations or maybe even some that I haven't thought of, I'm sure those exist too, you know, give us a call. I would love to chat with you and see, you know, what options we have down this DSCR lane for you.
Speaker #1
All right. And as you know, the primary... bulk of our audience is Colorado and Minnesota. We do our hard money lending in also Wisconsin and DC. But this we could do, it's more broad, right? So if you're listening outside of one of those markets, how do we know you could help us or not?
Speaker #0
Yeah. So generally I would say, assume we can help you. The list of states that we can't operate in is much shorter than the list of states we can. Thank you. Also, that varies by lender and by capital partners that we work with. So what I would say is pick up the call of the phone, give us a call. Let us chat about your specific state. And more than likely, we'd be able to help you almost anywhere on the cap tree.
Speaker #1
That's awesome, Scott. All right, we're at the end of the episode. I am going to go through my notes every episode. As you know, I go through the notes, things I've learned throughout that episode. And just listen in, Scott. If there's anything I'm missing, fill me in. Fill in those holes or add some color. And then if there's one final piece of advice for a real estate investor, we always love to get a final piece of advice. And then obviously your contact information. So we started off talking about the DSCR, debt service coverage ratio, and how that's not actually a ratio at all. It's a name of a loan. And we talked about why it's very attractive for real estate investors. It's not based on tax returns. It's based on income from the property, not you personally. So that opens up a wide net of people that it can help. Lender guidelines and rates and all that differ greatly. We really honed in on four different lenders that we like to use. We think that they're the best in the market. So we're offering what we feel to our clients is the best for. And they do DSCR ratios all the way down to 75% of gross income. So that could really help a lot of people that need to get out of loans or situations. There is appraisals. There is credit. There is experience. You said those three things that we look at. I think there's probably a reserve requirement also. Who does this help? rapid acquisition borrowers, the BRRRR borrowers, people that need to exit. And you finally came around with that last one. If you're looking for a cash out refinance to go do something else. We did talk about prepayment penalties. So be a little bit careful there. If you're working with Pine, we're going to obviously protect you. We want to build and craft the exact right product for you. Other DSCR lenders, they may or may not, I don't know, talk about that, but there are prepayment penalties on these loans. So just be careful with there. And then I love how you said this. This is a moldable tool. That was the word you used. I really love that moldable tool. So it really can help in a lot of different situations. There's a ton of flexibility with it. So we would love to work with you. We can give us a call, but how did I do on my notes, Scott?
Speaker #0
I think that was great. Really recapped everything well. And there's, I mean, we could honestly probably talk about these for another hour or two or three when I talk about specific intricacies of. the underwriting, various terms about the deal. It's a little more complicated than it sounds, but also quite simple. Just the minutia gets a little in the weeds.
Speaker #1
Yeah. Once you understand the picture and the goal, then you're like, okay, this lender is going to be the best for this situation, right? And then you go to that lender and you see what, well, you already know this, but you would see what their guidelines are. Then you would build the packet or whatever the loan packet around that guideline. That's good to point out. So it really starts with that goal, guys. All right. Any final piece of advice?
Speaker #0
Yeah. One last piece of advice, I think, as it pertains specifically to our conversation we had here is if any of you out there are in any sort of position that I mentioned, you've got fix and flip or a flip that won't sell. You've got the opportunity to buy a new rental. You want to pull cash out of something. Just any of those situations. pick up the phone, give me a call. I would love to chat with you and see if we're able to help you do what you're trying to do. So, you know, again, it fits so many different situations and there's no problem just giving us a call and seeing if maybe we can help you out and help you accomplish your goals here.
Speaker #1
All right, Scott, how do we do that? How do we get ahold of you?
Speaker #0
Yeah, our phone number here is 303-835- 444-45. You can also drop me an email at scott, so S-C-O-T-T at pinefinancialgroup.com. I really would love to chat with you.
Speaker #1
Yeah, man, you're a busy guy. You come and hung out with me. I don't even know how long I didn't time that. I have no idea how long we were on this, but you gave that time to me and Scott, I appreciate it. Thank you.
Speaker #0
Absolutely. Thank you for having me.
Speaker #1
And to the listener, you have other podcasts you could be listening to, but you chose the Real Estate Educators podcast. And for that, I am so incredibly grateful. I hope you got value out of this one. I did. Obviously, I get value out of all of them, but I love hanging out with our own Pine folks. So I got some value. If you got some value, five-star review, share it with a friend, and I hope you make this day a great one. I really hope you enjoyed this episode as much as I did. If you did, please be sure to follow and leave a five-star review. Oh, yeah, and tell a friend.

Description

00:00 – Scott's background in real estate investing and lending

02:35 – What is a DSCR loan?

07:45 – Understanding the debt service coverage ratio

13:05 – Who benefits most from DSCR financing?

14:35 – Using DSCR loans to grow a rental portfolio

16:05 – Refinancing BRRRR projects into long-term loans

22:25 – Understanding DSCR loan prepayment penalties

27:05 – How DSCR interest rates are determined

31:10 – Four ways investors can use DSCR loans

Connect with Scott Craft

Scott Craft is a Loan Officer with Pine Financial Group, helping real estate investors find financing solutions for acquisitions, renovations, refinances, and long-term rental investments.

Email: scott@pinefinancialgroup.com

Website: www.pinefinancialgroup.com

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Yeah, so DSCR stands for Debt Service Coverage Ratio, and it's really, it's just a different type of loan. So it's a long-term loan. That's primarily how it differs from a hard money short-term loan. The ideal borrower for this would be that person that we talked about who maybe has some properties that are not selling right now and needs to get out of a higher interest short-term loan.
Speaker #1
For the listener, if you have like Smaller properties have 30-year fixed on them. Now, if you're at 3% or 4%, you probably leave that alone. But if it's at a higher interest rate, it might make sense to refinance that property into a DSCR so you could free up room under the conventional guidelines to go out and finance a larger property.
Speaker #0
We were in negotiations. We're investing in real estate. They're winning. They're making money.
Speaker #1
Hey, hey, it's Kevin Amalsh, Pine Financial Group, where we work together so you succeed. Hey, you found us here on Facebook. You found us here on YouTube. Help us out. We're trying to build a channel to help more real estate investors just like you. You can help us out by subscribing, liking, leaving us some comments below. I have a very cool special guest with us today. You all know him, Mr. Scott Kraft. Welcome.
Speaker #0
Thank you, Kevin. Happy to be here again.
Speaker #1
It's been a little while. Yeah. So because it's been a little while, why don't we back up and in case they don't know who you are, tell us a little bit about yourself.
Speaker #0
Yeah, absolutely. So, um... My name is Scott Kraft. I am a loan officer here at Pine. I've been working in real estate investment full-time really since 2010. I've had my hand in a lot of different things over the years, being, you know, from buying rental properties to doing fix and flips to doing some minor developments of small single-family homes or duplexes. I've had my real estate license for almost 15 years now, and I've been with Pine from coming up on just under five years right now. It's been awesome. I love helping people achieve their real estate goals and crafting some loans to really help people get things done. This is just a dream job. So happy to be here and happy to talk about some DSCRs with you today.
Speaker #1
You love crafting deals. I see what you did there.
Speaker #0
Yeah, you like that?
Speaker #1
All right, Scott Craft. We're going to talk about DSCR. You obviously have a ton of experience. This is a newer product for Pine Financial. We've always wanted to stay really narrow in our lane and the fix and flip and value add lending. But this product has been quite popular and it's really helping real estate investors out accomplishing their goals. So we decided to bring it on in-house. So let's start with what is DSCR?
Speaker #0
Yeah, so DSCR stands for Debt Service Coverage Ratio. And it's really, it's just a different type of loan. So it's a long-term loan. That's primarily how it differs from a hard money short-term loan. But it's, I would compare it most to a conventional loan. However, The difference is in how you qualify a specific loan for approval, right? So debt service coverage ratio, if you break this down, what is your debt service, right? That's your monthly mortgage payment. And if we're talking about debt service coverage, that's talking about, well, does the income cover the debt service. And so what a DSCR loan looks at... is the property's ability to cover its own debt service. So a DSCR, instead of looking at your personal income on paper, looks at the property's rental income as the primary qualifier, or if it makes financial sense for the lender to approve that loan.
Speaker #1
Okay. So it's sort of sounding like a stated income loan from back in the day.
Speaker #0
Different. Yes. So it's definitely not stated income. Now, the biggest way that it differs from that is, number one, there is still tons of documentation that goes along with getting approved for a DSCR. Really, the one thing that's not included is your tax returns. And there might be some DSCR lenders out there that do still want to see that. But the biggest thing is we're looking at the property's rental income. And one of the biggest documents that verifies what that income is, so it's not just stated, is a lease. If you have the property rented... we can see what it's going to bring in every month. And so it's not exactly a stated income level.
Speaker #1
And I hear people talk about the looming recession and what's ahead of us, Scott. And you and I talk about this sometimes. And I said the stated income sort of as a joke, but it is a non-conventional, almost like... Non-QM. Is that the term I'm looking for? It's like a non-QM loan. Qualified mortgage is what that term means now. And that all came out of the 2008 crash. So I don't think we're going back necessarily to that time, but it is a shift in that direction. Am I wrong?
Speaker #0
No, I would tend to agree with that. Yeah. I mean, it's a different thing. And these are not loans that are backed by Fannie or Freddie. That's another big differentiator between these. what was happening back in 2008. So this is private money, big institutional investors come in and they back these loans.
Speaker #1
And there's still the ability to repay requirement, which also came out of the Dodd-Frank from 2008. But the ability to repay is not you personally, right? The difference is that's now it's the property's ability.
Speaker #0
Absolutely. Yeah. Again, we're looking at what that rental property can bring in an income compared to what you're paying out to cover the debt.
Speaker #1
Okay, cool. So I guess let's get into it. How do I qualify? What's the ratio, the DSCR ratio? What other factors are you looking at?
Speaker #0
Yeah. So lots of different lenders are going to have lots of different programs. For instance, The loans that we originate, we work with three to four different capital partners that provide the liquidity for us to do these loans. And each one of them have their own different set of requirements. So I believe depending on the type of property, you might need to see at least a 1.2 DSCR, whereas we have others where they can go down to a 0.75. And just to put that in layman's What that means is If you've got a 1.2 DSCR ratio, that means that for every dollar you're spending in mortgage payments to the lender, you're bringing in $1.20 in income. Okay, so positive 1.0 means you're making money every month, excluding repairs, broken furnaces, that sort of thing. It doesn't take that into consideration, just the income versus what you're paying out as a mortgage payment. but As I was saying, we have some people that can go down to as low as a 0.75. So what that means is that the income you're bringing in every month is 75% of what you're sending out every month to your lender. So you're losing money every single month. Now, there are a lot of DSCR lenders who would not even look at that. That's a hard stop for them. But there are others that will do that. So it's... It's such a wide gamut. And that's why I would recommend that anyone who is looking for a DSCR talks to a lender that has a lot of different options for you because there's so much variation in the different programs, right? But generally, what they're looking for is there is an appraisal, right? It's still a loan. Lender has to know what the house is worth based on a comparable sales method of valuation. They want to see a lease, right? Because that's what they're going to be basing the DSCR calculation on. That's not to say that you can't get a DSCR done even if it's not fully leased. But typically there's other stipulations that come along with that. But they're doing an appraisal where they not only value the home, but also the rental rate. What's the market rate for that house in that neighborhood? They are looking at your credits. We're interested in the level of experience that you have. You know, it's really almost just like a full doc loan minus your taxes, minus your personal income tax return.
Speaker #1
So it's a great product for someone who writes off everything. I'm thinking of like contractors or as you are, real estate agents, they tend to show very little income, right? Even though they're making a lot of money. That's the perfect borrower for this, it sounds like.
Speaker #0
Yeah, there's a number of different people that I think this suits so well. You know, like you mentioned, people... People who work in real estate, they might have really good years. They might have a year where they bought a house at the very beginning of the year, and they might not have it sold by the end of the year. So maybe they show almost zero income or net negative income for that year. And if they're relying on that income to qualify for a long-term loan, well, a conventional lender is not going to like that at all, right? So. We have borrowers whose income will vary year by year. Some years are great, some are bad. So this is a way to circumvent the issue that that creates, okay? It's also great for people who are just getting into the business and wanting to really scale their rental portfolios quickly, right? Because again, you might not have the income necessary to show X, Y, and Z income.
Speaker #1
From your W-2 or from your 1099.
Speaker #0
Yeah, exactly. Yeah. So again, if your income varies or if you're trying to buy multiple properties over a short period of time, you might not have the necessary income to hit that DTI that a conventional lender would be looking for. But if you can just take each individual property that you're buying and use the income from those, well, all of a sudden you can use this product to really scale quickly.
Speaker #1
That's really a... I didn't think about that, Scott, but that's really very accurate. So if we're looking at a case study and we wanted to help the listener understand like when would you use it, when would you not? I mean that's a perfect example. If you're trying to scale I mean there's rapid acquisition requirements in conventional lending oftentimes. Obviously, your debt-to-income you said DTI. That's debt-to-income ratio. That's impacted. Every property you buy, they're only taking 75% of the gross income and counting it towards your income. So until you could show leases and your expenses from your tax returns, you're limited to 75% of the gross on a conventional lender. This is quite different, and that is a perfect case study for when someone would want to use it. Are there any other great case studies?
Speaker #0
Yeah, well, you mentioned case study. The last person that I closed a DSCR for was actually exactly that person. He was a young guy getting started out in his real estate journey. And, you know, I think he picked up something like four to five rental properties within the last year. And he's been using this DSCR product to help qualify and be able to get that accomplished. Yeah. Who else? I mean, BRRRR investors. Let's say, you know, if you're... If you have only a limited amount of cash available to you, but some to play with, you can go to a company like Pine, get a hard money loan for short term, nine months to rehab the property, get that value increase, and then go on to the DSCR lender. We could just refinance you right into that long-term loan. And that increase in the equity in your property becomes your down payment on a 75% LTV DSCR. And you just take, you know, get your cash back, move on to the next one and just keep doing this over and over again. Another another really and this one's actually very pertinent right now. Another really helpful time that or another time that these loans can be very helpful is let's say you're a fix and flipper and you're in a hard money loan right now and you've got the property all finished. It's beautiful, but. In certain markets around the country, real estate is very slow right now. So you might not be selling it for what you expected to. And a great option to get out of that hard money loan is to go into a just pivot, turn that into a rental property, go into a long-term loan, and wait until the market turns around and adjusts for you to be able to sell that.
Speaker #1
We're seeing that like almost every... day. Like which of these, which of our borrowers would benefit more from dropping the price on their property and just getting out of it or refinancing it into a DSCR and live to fight another day. Like maybe a year or two from now, the market's different. It's easier to sell, but we are absolutely seeing that. So that's a great one. This episode is brought to you by Pine Financial Group. Pine Financial is a private lender specializing in short-term rehab lending to real estate investors. Got a property that needs some love? We can help. We are able to offer funding solutions because we raise private money from individual investors. With more than 15 years of experience, Pine offers passive investors an alternative that provides stability, consistency, and security to your portfolio. If you like real estate but want to avoid the ups and downs in effort, a Pine Mortgage Fund could be a perfect fit for you. Accredited investors will experience an 8% preferred return and profit sharing. diversify your portfolio. out of Wall Street and into Main Street with a Pine Financial Group fund. To get more information at pinefinancialgroup.com, that's pinefinancialgroup.com. While you think about that, I'm going to come back to the DSCR term. It's such a weird name, Scott, for a loan because what it actually stands for is a ratio, which is a guideline in commercial lending. So on the commercial side so just take a step back so the listener understands. On the commercial side, they qualify the property, not the borrower. I mean they look at globally, but in general, they look at the property. And as you alluded to earlier, Scott, they want to see a 1.2 or higher DSCR, debt service coverage ratio, to qualify for that commercial loan. It would be really rare to have a commercial lender under 1.2. Now, you do see that sometimes with owner-user commercial properties and that sort of thing, but it would be pretty unusual. And here's the point I want to make. That is based on a... NOI or net operating income. So you take your gross, you subtract all your expenses, including your vacancies, and then you still have to hit a 1.2 to qualify for the loan. The residential, they just call it DSCR. Again, I think that's strange, but it's based on gross. So help us as a listener understand the difference there and why that's so powerful.
Speaker #0
Yeah. So the difference there, when you're talking about NOI versus gross, there's a all kinds of expenses that are not being taken into consideration on that DSCR calculation, right? So you're not taking into consideration vacancy, right? If you have the property leased right now, they call it good. They don't have any further stipulations, but you might have a vacancy come up and they build that into an NOI calculation, right? Same thing with repairs. Furnace breaks, hot water heater breaks, you have a water leak, all kinds of additional expenses that you're going to face. And we all know you're going to have these expenses as a landlord. But again, for the purposes of a DSCR qualification, they just don't take that into consideration. Isn't that crazy? I mean, it's great for the borrower.
Speaker #1
Yeah.
Speaker #0
Yeah.
Speaker #1
I mean, if you really need... I know. Sometimes you want to, this has your strategy. We haven't even talked about interest rates yet. They're very competitive. But sometimes, I mean, they're going into a 0.75 DSCR. That's a little scary. Now, I think it's good if you need it, but I guess caution. What are your thoughts?
Speaker #0
Yeah, I would definitely say caution. I would not recommend this for someone who's in a great position, just trying to build up their rental portfolio. you're getting into these high leverage DSCRs where you're losing money every month. I would not recommend it for that person. The ideal borrower for this would be that person that we talked about who maybe has some properties that are not selling right now and needs to get out of a higher interest short-term loan to get something more stable where the bleeding is less severe, right? And they can hold on longer until the market turns around.
Speaker #1
Yeah. As long as there's a strategy to cover that shortfall and you have the ability to do it, it could work really well. Now, before we get into rates, talk to me about prepayment penalties, because I know that they do exist in this space, which is not common in the conventional world.
Speaker #0
Right. Yeah. So prepayment penalty, again, what this alludes to is you'll have something, whether it's one year, maybe up to five years, where if you pay back that loan, You either sell the house or you refinance the DSCR. You're going to owe your lender a pre-specified amount. Okay, it could be one point, could be two, could be up to five points, depending on how quickly it is and how the loan was set up. The reason for this is these big institutional investors that are backing these loans, they don't make their money on turnover like us as hard money short-term lenders do. They make their money by taking cash, lending it out. They don't want to touch it. They just want to receive their interest every single month. Okay. And again, since these are not consumer loans and they're business purpose only, I think that it's easier for lenders to impose that type of requirement. You know?
Speaker #1
Yeah. So there's a trade-off, right? If I understand this right. You're the expert, but I think I got this right. If I go a longer prepayment, if I'm going to agree to that, then I might get a break on my interest rate. Is that the tradeoff?
Speaker #0
Yes, that is. Absolutely. So there's a lot of different ways that you can kind of massage an interest rate when you're going through the. the pricing process for a loan. So if you know you're going to hold this property, you have no intention of refinancing it or selling it within the next three to five years, it's very easy to get a break on that interest rate. But if you're telling the lender, hey, I'm only comfortable paying a one-year prepayment penalty. I'm only confident that I'm going to hold this loan for one year. They're going to charge you more on the interest rate. to make up for that risk of potentially getting their money back and having to redeploy it.
Speaker #1
Yeah. So that's all about the strategy. And I guess working with someone like you, a professional that understands this and that understands the different products, we work with different lenders. And so you shop around and try to find the exact right loan for a specific purpose or goal. So I think that's important to point out.
Speaker #0
Yeah. That's when, you know, when I'm talking to somebody, who's coming to me and says, hey, I think I want a DSCR for this property. One of my most important questions is what are you most trying to accomplish with this? Do you want the highest leverage? Do you want the lowest interest rate with the lowest fees? What are you thinking about a prepayment penalty? Do you intend to sell this or refinance it sometime in the near future? Because those are all questions that you can really use to move around the different terms of that loan product. to make sure that they're getting in the best possible loan for them.
Speaker #1
And even take it, I know you're getting to this, but the one step past that is like, what's the ultimate goal? Are you trying to build a portfolio? Are you trying to hit a much like payoff alone? That's hitting a maturity deadline. Are you just trying to stop bleeding? Like there's different goals, right? And then from there, it's like, do you want the lowest interest rate? Do you want the shortest prepayment penalty? Like, and so you craft it. with the ultimate goal in mind, right?
Speaker #0
Yeah, exactly. And another type of person that this product is great for that I was trying to remember earlier, but just couldn't put my finger on is someone who potentially they have a ton of equity in a house, right? Let's say they have a rental property that's free and clear or has significant amount of equity in it. It's easy for them to go to a DSCR lender and say, hey, I need to pull some equity out. I need to turn this into cash to go out and do another deal or whatever opportunity they have in front of them at any point in time. DSCR lenders can do cash outs. So that's a great tool for people to be able to utilize their equity.
Speaker #1
There's so many options with this tool. And it's just like we say with hard money loans, people say, oh, your interest rates are so high, blah, blah, blah. Well, cool. Then don't borrow at one, but two, it's just a tool. I mean, you pull out a hammer to hit in a nail. You don't pull out a hammer to hit in a screw, right? So you have to have the right tool for what you're trying to accomplish. That's all this is.
Speaker #0
Exactly. It's just another arrow in the quiver, you know?
Speaker #1
Exactly.
Speaker #0
And it's just like when you're rehabbing a property, you have to pay your contractor. I mean, I would love to get a house rehabbed without having to pay a contractor. Exactly. It just doesn't work like that.
Speaker #1
Well, if you do it yourself and it takes you a year to do it, then you'll pay the lender in interest instead of the contractor. That's a whole nother podcast episode. Let's talk about interest rates because I know they're pretty competitive. So tell me about that.
Speaker #0
Yeah, so that's another thing that can really vary greatly between lenders, between even our capital partners. We have some that are more expensive, some that are cheaper, but the trade-offs are in maybe a higher, they're more expensive, but they'll go down to a lower DSCR or a higher LTV, something like that. So interest rates, unlike... hours at Pine, they are much more heavily determined by the general macroeconomic conditions out there, very much like your home mortgage, right? So say you're buying a new house, you go to your lender, say, hey, I need to get a new mortgage. I'm buying this house. They say, great, here's where interest rates are right now. So these move daily. It could be. I mean, they might stay stagnant for a few days here and there, but they could just jump. They could come down. It's constantly moving.
Speaker #1
Okay. So I like that answer. And how do they compare to conventional?
Speaker #0
They're going to be higher.
Speaker #1
They are higher. Because sometimes I've seen it where they've actually been lower in some examples.
Speaker #0
That's interesting. But yeah, I think by and large, generally, they're going to be higher. Because again, this is a specialized product. They have to be- That makes sense. Now they have to be comparable. They can't just be outrageously higher than a conventional loan because a lot of these people are mentioning that- would benefit from a DSCR, they could also go conventional. Maybe a lot of them can't, but certainly a portion of them can. So they have to incentivize people to go this route versus conventional.
Speaker #1
So if I'm thinking about a debt strategy for my own personal portfolio, Scott, and I'm oversimplifying this, but I'm just curious if I have this right. So if I want my Thank you. 30-year fixed money to maximize that out. So I have restrictions on how many properties I could finance and there's that sort of thing. But if I have a little tiny condo, for example, or a larger fourplex, I'd rather put the debt on the fourplex, right? So I want to max out my leverage on the 30-year conventional. From there, I would go into DSCR. That would be the next best loan to get. And once I max that out, or if I'm... Not able to get that. Then I might go to a bank and get like some portfolio loan or something like that. That's where my mind is sort of thinking. And then obviously private capital and that whole world would be the last resort to me. Am I thinking about this right?
Speaker #0
I think that all makes sense. Yeah. If you have the ability, if you can show the income to max out what a conventional lender will give you, I would do that because it's a little cheaper. Might be slightly more of a headache, but... would, I would think would be cheaper. And then yeah, move, move on down the line like that. DSCR would definitely be the next best option.
Speaker #1
Definitely in the strategy. Yeah. So for, for the listener, if you have like smaller properties that have 30 year fixed on them. Now, if you're at 3% or 4%, you probably leave that alone. But if it's at a higher interest rate, it might make sense to refinance that property into a DSCR. So you could free up room in the, under the conventional guidelines to go out and finance a larger property. I'm just kind of brainstorming out loud, but that's where my mind goes when I'm hearing you talk about this loan. All right. So anything else you'd like to share about the DSCR with our audience?
Speaker #0
You know, I think the biggest takeaway is a DSCR is such a moldable tool that fits so many different unique opportunities. again It could be you're in buying mode. You want to scale quickly. It could be you're doing a BRRRR strategy one by one. It could be you're a hard money or you're a fix and flipper who's run into some trouble. Could be you have equity and you're trying to find the cash to go do the next purchase. There's so many different uses for this. And again, us as the lender, we have the ability to really massage that loan. to mold to exactly what suits your situation the best. So, you know, if you think that this is something that you might benefit from, given any of those situations or maybe even some that I haven't thought of, I'm sure those exist too, you know, give us a call. I would love to chat with you and see, you know, what options we have down this DSCR lane for you.
Speaker #1
All right. And as you know, the primary... bulk of our audience is Colorado and Minnesota. We do our hard money lending in also Wisconsin and DC. But this we could do, it's more broad, right? So if you're listening outside of one of those markets, how do we know you could help us or not?
Speaker #0
Yeah. So generally I would say, assume we can help you. The list of states that we can't operate in is much shorter than the list of states we can. Thank you. Also, that varies by lender and by capital partners that we work with. So what I would say is pick up the call of the phone, give us a call. Let us chat about your specific state. And more than likely, we'd be able to help you almost anywhere on the cap tree.
Speaker #1
That's awesome, Scott. All right, we're at the end of the episode. I am going to go through my notes every episode. As you know, I go through the notes, things I've learned throughout that episode. And just listen in, Scott. If there's anything I'm missing, fill me in. Fill in those holes or add some color. And then if there's one final piece of advice for a real estate investor, we always love to get a final piece of advice. And then obviously your contact information. So we started off talking about the DSCR, debt service coverage ratio, and how that's not actually a ratio at all. It's a name of a loan. And we talked about why it's very attractive for real estate investors. It's not based on tax returns. It's based on income from the property, not you personally. So that opens up a wide net of people that it can help. Lender guidelines and rates and all that differ greatly. We really honed in on four different lenders that we like to use. We think that they're the best in the market. So we're offering what we feel to our clients is the best for. And they do DSCR ratios all the way down to 75% of gross income. So that could really help a lot of people that need to get out of loans or situations. There is appraisals. There is credit. There is experience. You said those three things that we look at. I think there's probably a reserve requirement also. Who does this help? rapid acquisition borrowers, the BRRRR borrowers, people that need to exit. And you finally came around with that last one. If you're looking for a cash out refinance to go do something else. We did talk about prepayment penalties. So be a little bit careful there. If you're working with Pine, we're going to obviously protect you. We want to build and craft the exact right product for you. Other DSCR lenders, they may or may not, I don't know, talk about that, but there are prepayment penalties on these loans. So just be careful with there. And then I love how you said this. This is a moldable tool. That was the word you used. I really love that moldable tool. So it really can help in a lot of different situations. There's a ton of flexibility with it. So we would love to work with you. We can give us a call, but how did I do on my notes, Scott?
Speaker #0
I think that was great. Really recapped everything well. And there's, I mean, we could honestly probably talk about these for another hour or two or three when I talk about specific intricacies of. the underwriting, various terms about the deal. It's a little more complicated than it sounds, but also quite simple. Just the minutia gets a little in the weeds.
Speaker #1
Yeah. Once you understand the picture and the goal, then you're like, okay, this lender is going to be the best for this situation, right? And then you go to that lender and you see what, well, you already know this, but you would see what their guidelines are. Then you would build the packet or whatever the loan packet around that guideline. That's good to point out. So it really starts with that goal, guys. All right. Any final piece of advice?
Speaker #0
Yeah. One last piece of advice, I think, as it pertains specifically to our conversation we had here is if any of you out there are in any sort of position that I mentioned, you've got fix and flip or a flip that won't sell. You've got the opportunity to buy a new rental. You want to pull cash out of something. Just any of those situations. pick up the phone, give me a call. I would love to chat with you and see if we're able to help you do what you're trying to do. So, you know, again, it fits so many different situations and there's no problem just giving us a call and seeing if maybe we can help you out and help you accomplish your goals here.
Speaker #1
All right, Scott, how do we do that? How do we get ahold of you?
Speaker #0
Yeah, our phone number here is 303-835- 444-45. You can also drop me an email at scott, so S-C-O-T-T at pinefinancialgroup.com. I really would love to chat with you.
Speaker #1
Yeah, man, you're a busy guy. You come and hung out with me. I don't even know how long I didn't time that. I have no idea how long we were on this, but you gave that time to me and Scott, I appreciate it. Thank you.
Speaker #0
Absolutely. Thank you for having me.
Speaker #1
And to the listener, you have other podcasts you could be listening to, but you chose the Real Estate Educators podcast. And for that, I am so incredibly grateful. I hope you got value out of this one. I did. Obviously, I get value out of all of them, but I love hanging out with our own Pine folks. So I got some value. If you got some value, five-star review, share it with a friend, and I hope you make this day a great one. I really hope you enjoyed this episode as much as I did. If you did, please be sure to follow and leave a five-star review. Oh, yeah, and tell a friend.

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