Chasing Financial Freedom

The mistakes in a deal usually don't show up the day you buy. Six months in, the rehab is still going, the payments are still due, and your cash is gone.
Ryan covers the six places he sees money leak out of deals on the lender side, from rehab budgets and draw schedules to reserves, projected rents, loan terms and your exit. Plus how to stress test a deal at 10%, 15% and 20% below market so you know whether to buy or walk away.
(0:00) Where money leaks out of deals
(0:38) Free Deal Check: Will It Finance?
(1:12) Rehab and holding costs
(2:33) Over-leveraging and the wrong loan
(4:57) No reserves
(6:33) Projected rents vs actual rents
(7:50) Balloon and prepayment terms
(8:14) Stress test at 10%, 15% and 20% below market
(9:11) Exit strategy, plan B and plan C
(10:55) A few small mistakes stacked together
Free Deal Check, Will It Finance?: https://tally.so/r/PRRerQ?src=pod
Find Ryan at https://trutalk.co

Picture a $900 collection from three years ago on your credit report. Pay it the week before you apply for your next rental loan, and you might drop your score instead of fixing it.
This episode walks the three paths some programs look at on a rental file: leave the collection alone, pay it in full, or settle it. You will also hear why timing matters, and why full time investors often clean this up between deals instead of the week of the pull.
You leave with four checks: confirm it is a collection versus a charge off versus a late, verify the balance and age, ask how some programs will treat leave it, pay it, or settle before your next rental loan, and only then act with time for the report to update if a payment is the right path. Confirm what it is, ask first, and keep the next rental loan from being the place you learn the hard way.

Can you get a DSCR loan without tax returns? Yes. With a DSCR loan, the rental property's income qualifies you, not your personal tax return.
If you're self-employed, your tax return is built to save taxes, not to buy rentals. In this episode, Ryan walks through an example investor who shows $18,000 of income on his tax return and still qualifies for a $300,000 rental.
You'll learn:
Why your tax return works against you as a self-employed investor
How the rent covers the payment, and what a 1.39 ratio means
What to do when the rent is thin, and how more down moves a 1.17 up to 1.25
What some programs look at on credit, cash to close, and reserves
How the appraiser estimates market rent on the property
Four steps to take before you apply
The numbers in this episode are an example for illustration only. Every program is different, so talk to a licensed loan officer about your own situation.
More tools and episodes at trutalk.co

Your $180,000 of equity may turn into only $95,000 of cash on a DSCR cash-out refinance, and that gap lands right when you were counting on the money for your next deal.

This episode shows you the math. Take the value, multiply it by the program's loan-to-value cap, and subtract what you owe. Say a rental is worth $340,000 and you owe $160,000. At 75%, that is $255,000 minus $160,000, or $95,000.

Then the lender tests the rental again on the new, larger payment. Say the ratio goes from 1.76 to 1.24, and a program that wants 1.25 would cap your cash at a lower amount. You will also hear how seasoning, which is how long you have owned the property, can change the value the program uses, and what the cash costs you in loan costs, a higher payment, and a thinner equity cushion.

You leave with five steps to run on your own rental before you count on the cash. Your cap, minimum DSCR, and how long you have owned the property depend on the program and the rental.

Run your own numbers before that cash goes into your next deal.

Run the DSCR the way underwriting will before you offer on a rental, so the ratio you close on is the one you live with.
In this episode, Ryan opens with one hypothetical rental: a 1.33 DSCR on the spreadsheet that drops to 1.11 once the lender's numbers go in. Same house, same loan, four inputs.
He walks through each. Rent: why the lender uses supportable rent from the appraisal or lease, and how to run the ratio three ways, including a vacancy month stress test. Taxes: why the seller's bill is not yours, and the three questions to ask the assessor. Insurance: why you need a bindable landlord quote before your inspection window closes, and how it hits cash to close. HOA: why a bigger down payment cannot shrink dues, and what to search for in the reserve study and board minutes.
He closes with the check: run the lowest of your three ratios before you offer.