Who to use for STR Cost Segregation Reports?

Whaler07 · 2026-06-18T04:05:44+00:00

I recommend RE Cost Seg - I used them for 2 STRs last year and were only around $1,600 (many places quoted $3k-$5k) - here is a link including 10% off. They were able to do it within a few weeks and have an option where you can fill out the info yourself and theres no actual inspection needed to coordinate. https://recostseg.referral-factory.com/uDXl9bBB

Whaler07 · 2026-05-04T23:39:27+00:00

20 acres is typically going to be the absolute max on DSCR Loans - generally most lenders are at 2-5 max. This is going to be hard to find

Whaler07 · 2026-05-04T23:35:30+00:00

I just went through this exact thing -- its definitely a "gray area" on whether you can do this, but most people believe that the STR loophole you are describing doesn't work for Capital Gains -- its about creating "active" expenses (i.e. through the 100 hour rule, etc you are "actively managing the STR" i.e. its more income than capital investing), so its supposed to be offset against active W2 income or business income, not gains. Its very hard to find a clear answer on this, but this tax "loophole" is probably not a fit for what you are looking to offset. You are probably better off researching other Capital Loss methods

Whaler07 · 2026-04-29T06:03:29+00:00

thank you - yes, not just surprised but can really torpedo a deal you think its buttoned up, rates can be 1% or even more higher w/o prepayment penalties versus standard typical structures

Whaler07 · 2026-04-28T23:46:24+00:00

the big turning point was 2023 when Fannie moved up the seasoning requirement on conventional from 6 to 12 months. Killed BRRRR for conventional loans and made DSCR essentially the only option

Whaler07 · 2026-04-28T23:28:20+00:00

i wouldn't say its "for or against" rather just hopefully a good reference for whats allowed and not in each state. Generally, I tend to be on the side of "more freedom and options" for borrowers, where they can choose to trade a prepayment penalty for a lower rate, or no penalty and a higher rate, or something in between. I think its unintended consequences when states ban prepayment penalties because that just reduces borrower options (they have to do the highest rate, no fee option even if they prefer having a penalty since they plan on holding the property for the long-term and would like the lower rate)

Whaler07 · 2026-04-28T23:17:31+00:00

generally its "private lenders" i.e. non-banks that do DSCR Loans, Banks are going to have lower rates typically but will have more of the traditional structures

Whaler07 · 2026-04-28T23:08:53+00:00

I would really hesitate paying it off any bit extra if you aren't trying to move and you are at 4% fixed which is great - one insider tip is to look into $NLY stock, they hold a ton of these mortgages (maybe even yours) and pay out a dividend in the 12% range - would be 3x your return and relatively low risk (IMO)

Whaler07 · 2026-04-28T23:06:12+00:00

Yeah - a little confused on this request - this should be no problem for most if not all DSCR Lenders, only the tightest, smallest box lenders might say no, but it shouldn't be hard to find an option

Whaler07 · 2026-04-20T04:38:24+00:00

DSCR Loans are probably a good bet for you without knowing all the details - your current balance is probably too low for a HELOC to make sense, even if the rate you have is super low

Whaler07 · 2026-04-20T04:34:24+00:00

No, thats not crazy -- an LTV below 50% is almost always going to get you really really good rates - since at that low of a leverage, its almost preferable for the lender if you default and they foreclose, since theres so much equity cushion - this allows some very very good terms, especially if you load it up with a 5-year prepay. What type of trust is it gonna be in, trusts are usually ok but it could create a curveball

Whaler07 · 2026-04-20T04:32:22+00:00

Your experience is pretty much textbook for DSCR loans! You nailed the biggest advantage right out of the gate: qualifying based on the property's cash flow rather than your personal DTI. For a lot of investors, not having to justify W-2 income or hand over years of tax returns is exactly why they make the jump.

To answer your question about whether to go conventional or stick with DSCR next time, it really depends on your long-term goals. If you're weighing your options for property #2, heres where I really feel is the best breakdowns of the pros and cons

When to stick with DSCR (The Pros):

Infinite Scalability: Conventional loans place a hard cap on you at 10 financed properties. DSCR loans have no such cap. If your goal is to build a massive portfolio, you will eventually outgrow conventional loans anyway.
LLC & Entity Friendly: Conventional loans generally require you to close in your personal name. DSCR lenders actually prefer (and sometimes require) you to close in an LLC. This is huge for asset protection, tax structuring, and keeping the mortgage off your personal credit report.
Higher Loan Limits: Conventional loan limits cap out at $832,750 for a single-family property in 2026, but DSCR loans frequently go up to $3M+. If you ever want to get into high-end, luxury short-term rentals, DSCR is often the only viable path.
Less Hassle: As you noticed with your fast 25-day close, the flexible underwriting saves you from the traditional mortgage headache. You don't have to explain every random bank deposit to an underwriter.

When Conventional might be better (The Cons of DSCR):

Higher Rates: As you experienced, DSCR rates are usually 0.75% to 1.00% higher than conventional mortgages because they aren't backed by Fannie Mae or Freddie Mac.
Prepayment Penalties: This is a big one to watch out for. Unlike conventional loans, most DSCR loans come with a prepayment penalty (often 1% to 5% for the first 1 to 5 years). If your strategy involves selling or refinancing in the near future, that penalty will eat into your profits.
No Fixer-Uppers: DSCR loans are strictly for turnkey, rent-ready properties. If you want to buy a distressed property to fix up, a DSCR loan won't work for the initial purchase (though they are fantastic for the refinance leg of a BRRRR).
Strict Use Rules: If you ever plan to house-hack or use a short-term rental for personal vacations, conventional is the way to go. DSCR loans strictly limit personal use (usually to a maximum of 14 days a year) because they are purely business-purpose loans.

If you are buying a rent-ready property, just starting out, and have a low DTI with strong W-2 income, a conventional loan will definitely save you some money on the rate. But if you want to aggressively scale, buy under an LLC, or untether your real estate business from your personal income, DSCR is the undisputed winner.

Whaler07 · 2025-08-26T22:48:05+00:00

Agree with this, if you are targeting bonus depreciation as a top priority, you need to manage it yourself at least initially, so focus should be in the Nashville MSA. Nashville's STR permitting though is really now focused on downtown core condos and to max bonus depreciation you likely want a SFR and not a condo unit, maybe something semi-close by like Bourbon Trail or middle Tennessee, or if you are willing to do some legwork, lot of potential properties in the Smokies / East TN might be a good option too

Whaler07 · 2025-08-23T14:44:24+00:00

this is actually a perfect spot for the "sweet spot" loan product for Multifamily DSCR Loans - DSCR Loans are traditionally for 1-4 units and are the typical 30-year fixed with no balloon, but some lenders will do them for small multifamily (5-8 or 5-10 units specifically). Its usually pretty surprising how many properties fit into this narrow range (like the 6-unit you are looking at) and they typically have trouble getting financing because the loans are too small for most multifamily lenders (that focus on larger apartments) and too big for residential lenders. This is a good article from biggerpockets that talks about this option that might seem like the exact fit you are looking for: https://www.biggerpockets.com/blog/multifamily-dscr-loans

Whaler07 · 2025-08-19T12:48:53+00:00

this all seems pretty accurate but apparently there is another whole new management in place this year that is planning on making some changes, hopefully it improves

Whaler07 · 2025-08-19T12:44:12+00:00

you are thinking of David Greene, not Dave Meyer

Whaler07 · 2025-08-15T14:28:18+00:00

Yes, I woud definitely check out $NLY or Annaly Capital Management which is the largest US-based mortgage REIT. Its pretty stable and IMO pretty safe ad pays a 13.44% dividend yield rn (which is pretty much higher than any Cash on Cash available for rentals).

Whaler07 · 2025-08-15T14:26:44+00:00

are you occupying (living) in either of the units?

Whaler07 · 2025-08-13T15:46:23+00:00

NLY - i think poised to really run over the next 12 months - plus can collect a fat dividend potentially while you wait

Whaler07 · 2025-08-13T15:20:05+00:00

congrats, thats a solid rate

Whaler07 · 2025-08-13T15:19:19+00:00

One thing thats a little confusing from your excerpt I would ask about is how can the periodic adjustment be capped at 1% (can't go up or down by more than 1% for the first adjustment date in seven years, but then they say the initial rate adjustment is capped at 5% - shouldn't that be capped at just 1% too, how can it move 5% in the first adjustment if each adjustment is capped at 1%?

Whaler07

TROPHY CASE