There’s a piece of advice that keeps making the rounds in investor groups, and it needs to go away. People tell you to open your LLC six months early so you can “season” it before applying for a DSCR loan. Sounds responsible. Feels like the smart, prepared thing to do. It’s not quite right, and it’s slowing people down for no reason. I work with investors every day and I’ve funded over $50M in investor deals, so I can tell you plainly that DSCR lenders do not care how old your LLC is. Not six months, not even six days.
Here’s what actually matters. The lender needs the entity to be valid and active so they can record the title and the mortgage in the right name. That’s the whole reason it exists on the file. A brand new LLC does that job just as well as one you set up two years ago. We’ve closed plenty of deals where the client opened the LLC the week before closing and everything went through clean. You don’t even have to use an LLC at all. Buying in your personal name works too for a DSCR loan. So if someone is telling you to wait half a year to age an entity before you can buy, be careful where you’re getting your information, because that delay is costing you deals, not protecting you.
Let’s Talk
If you’ve got a DSCR deal you’re sizing up and you want a straight answer on how to structure the entity, grab a time with me and we’ll walk through it. No pressure.
By the way, I was featured on REI Agent Podcast recently and we covered how investors can use DSCR loans, HELOCs, cash-out refinances, house hacking, and the BRRRR strategy to keep growing their portfolios. We also discussed what underwriters look for and the mindset needed to build long-term wealth through real estate.
Watch: DSCR Loan Calculator: How Much Can You Actually Borrow? (Live Examples) and learn how lenders really calculate DSCR loans and why rent, appraised market value, credit score, and loan structure determine how much you can borrow.
Ben Stef, Mortgage Advisor | NMLS# 2018674
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