### What is Single Room Occupancy?

Single Room Occupancy or SRO is the renting of a house room by room. This is similar to a boarding house where there are very few communal common areas. Typically a fixed price for one person per room, and a slightly higher rate for two people in one room.

 

Single Room Occupancy can be a great rental property investment strategy given the ability to maximize a dwelling's rent revenue. For example, a 2,500 SF 4 BR single family residence that rents for $2,000/month can be converted into an 8 BR SRO that generates $500 per BR or $4,000 per month in rental income. 

 

While in the example above we were able to double the monthly rental income, it's important to make sure you don't double your property management headaches. Rental property investors who are successful with SRO rentals have a disciplined system for screening tenants and often partner with Section 8, social security and veterans programs.

Single Room Occupancy or SRO is the renting of a house room by room. Learn more about single room occupancy at OfferMarket.

Single Room Occupancy (SRO) - Real Estate Glossary

What is Single Room Occupancy ("SRO") in real estate?

Essex, MD is a waterside community in Baltimore County. Learn more about Essex, MD real estate. 

Essex, MD 21221 - Real Estate Market Overview - OfferMarket

Essex, MD

Stewart Beal talks about his “super-size house hacking,” BRRR, property management, and lessons for becoming a successful investor. Enjoy the show!

large_Offer_Market_Podcast_Youtube_Cover_How_To_Invest_In_Real_Estate_With_Stewart_Beal_2e69705626.jpeg

medium_Offer_Market_Podcast_Youtube_Cover_How_To_Invest_In_Real_Estate_With_Stewart_Beal_2e69705626.jpeg

small_Offer_Market_Podcast_Youtube_Cover_How_To_Invest_In_Real_Estate_With_Stewart_Beal_2e69705626.jpeg

thumbnail_Offer_Market_Podcast_Youtube_Cover_How_To_Invest_In_Real_Estate_With_Stewart_Beal_2e69705626.jpeg

Offer_Market_Podcast_Youtube_Cover_How_To_Invest_In_Real_Estate_With_Stewart_Beal_2e69705626.jpeg

468-Unit House Hack w/ Stewart Beal - OfferMarket Podcast

OfferMarket Podcast, Episode 1: 468 Unit SUPER SIZE House Hack with Stewart Beal

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

How These DSCR Scams Work

Why This Scam Trend Is Growing

How to Protect Yourself from DSCR Lender &amp; Broker Scams

Term Sheet Analyzer

DSCR Loan Rate Update

Final Thoughts

Grow your rental portfolio with OfferMarket

**Last updated:** February 27, 2025

 

*This article was written by Svetlana "Ana" Tushevski, Client Success Manager at OfferMarket, in response to a recent rise in concerning, misleading and fake loan terms.*

 

In recent years, **[DSCR loans](https://www.offermarket.us/dscr-loan?ref=content-dscr-lender-broker-scams)** have gained popularity among real estate investors looking for flexible financing options without traditional income verification. However, with this growing demand comes a concerning trend—lenders and brokers engaging in misleading tactics, promising artificially low interest rates to attract borrowers while the 5 yr treasury is rising.

 

Many investors are lured in by the promise of interest rates that seem too good to be true—*because they are*. In this article, we’ll explore how these deceptive practices work, why they are on the rise, and how real estate investors can protect themselves from falling victim to a DSCR lender or broker scam.

 

## **How These DSCR Scams Work**

 

### **1\. The Bait-and-Switch Tactic**

Some brokers and lenders advertise **unrealistically low DSCR interest rates** to capture leads. For example, while the conventional 30-year fixed-rate mortgage is sitting at **6.80%**, these lenders might falsely promise DSCR rates of **6.5% or lower** without disclosing the fine print.

 

Once the borrower submits an application and gets deep into the process, they are suddenly hit with unexpected fees, additional conditions, or a completely different interest rate than what was originally promised. At this point, with time, money and effort already invested, many borrowers feel trapped into proceeding anyway.

 

### **2\. Fake “Rate Locks” That Don’t Exist**

Some brokers claim they can lock in a low interest rate immediately—only to later inform borrowers that rates have suddenly “changed.” Unlike conventional finance options, many DSCR lenders do not provide true rate locks until a the borrower's loan application has been underwritten.

 

Unsuspecting borrowers assume they have secured the original low interest rate, only to find out they are actually being offered a much higher rate when it’s time to finalize the loan.

 

### **3\. Misleading Rate Buydowns**

A legitimate way to lower DSCR interest rates is through a rate buydown, where the borrower pays upfront points to reduce the interest rate. However, some lenders fail to disclose that the advertised “low rate” requires a hefty buydown—often making the loan *far more expensive in the long run.*

 

For example, a lender may advertise a **6.5% rate**, but in reality, that rate requires the borrower to pay **3-4 points upfront**, costing thousands of dollars. If the investor is not aware of this, they may be in for a rude awakening at closing.

 

### **4\. Working With Unqualified or Dishonest Brokers**

Some mortgage brokers operate with little transparency, shopping loans to multiple lenders without disclosing the true costs or terms upfront. These brokers often:

* Hide origination fees 
* Inflate interest rates to increase their commission 
* Disguise unfavorable loan terms

 

In the worst cases, brokers may lack experience with DSCR finance altogether, resulting in unrealistic approvals, delays, or outright denials.

 

## **Why This Scam Trend Is Growing**

 

### **1\. Rising Interest Rates**

In a rising and elevated interest rate environment with low transaction volume, unethical and fraudulent brokers desperate for income will advertise artificially low DSCR interest rates to attract attention and generate leads.

 

### **2\. More New Investors Entering the Market**

With real estate investing growing in popularity, many first-time investors are unfamiliar with how DSCR finance works. Scammers prey on this lack of knowledge, making promises that experienced investors would immediately recognize as red flags.

 

### **3\. Lack of Industry Regulation**

Unlike conventional finance options, DSCR loans fall under private lending standards, meaning they are less regulated. This allows some lenders and brokers to engage in deceptive marketing without facing the same level of scrutiny as traditional banks and mortgage companies.

 

## **How to Protect Yourself from DSCR Lender & Broker Scams**

 

### **1\. Research Market Rates & Compare Offers**

Before engaging with any lender or broker, investors should research current **[DSCR loan rates](https://www.offermarket.us/blog/dscr-loan-interest-rates)** from multiple sources. If one offer seems significantly lower than others, it’s likely a red flag.

 

<div style="position: relative;width: 100%;overflow: hidden; height: 380px;">
<iframe title="DSCR Loan Interest Rates Index" style="position: absolute;top: 0;left: 0;bottom: 0;right: 0;width: 100%; height: 100%;border: none;" seamless frameborder="0" scrolling="yes" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRJPw1fYWqj_5mdlNBrD5MLne_ApqpOXlNmkmNE_sZfPgsbn9pU0mWUenEO1x6WE9237S7jzaQE2Hig/pubchart?oid=262687025&amp;format=interactive"></iframe>
</div>

 

### **2\. Ask for a Loan Estimate Upfront**

A legitimate lender should be willing to provide a Loan Estimate (LE) or a detailed term sheet outlining:

* Interest rate 
* Loan-to-value (LTV) ratio 
* Fees and costs 
* Prepayment penalties

 

If they hesitate to provide this information or make excuses, **walk away!**

 

### **3\. Verify the Rate Lock Policy**

Investors should ask in writing whether the lender offers a rate lock and under what conditions. If the lender says the rate is locked but later changes it without explanation, that’s a major red flag.

 

### **4\. Be Cautious of High Upfront Fees**

Some fraudulent lenders require large deposits or fees before issuing terms. A reasonable deposit may be required for an appraisal, but excessive fees without clear documentation should be avoided. Nearly all DSCR loan programs require the appraisal to be managed by a 3rd party Appraisal Management Company (AMC) so your appraisal fee should be invoiced by the AMC, not by the DSCR lender.

 

### **5\. Work With Reputable Lenders**

Look for lenders and brokers with a proven track record, [real customer reviews](https://www.google.com/search?q=offermarket), and clear communication. Beware of anyone unwilling to provide references or loan examples.

 

## **Term Sheet Analyzer**

 

Our mission is to help you build wealth through real estate. The most important rules in building wealth:

- **Rule number 1:** do not lose money
- **Rule number 2:** do not forget rule number 1!

To go the extra mile to do our part to, we now offer a service called **[Term Sheet Analyzer](https://www.offermarket.us/blog/term-sheet-analyzer?ref=content-dscr-lender-broker-scams)**. Simply submit your loan request through the above link and we will collect and thoroughly review any 3rd party term sheet to let you know if it's legitimate and how it compares to OfferMarket's always transparent, always competitive loan terms.

 

## **DSCR Loan Rate Update**

 

<div style="position: relative;width: 100%;overflow: hidden; padding-top: 56.25%;">
<iframe style="position: absolute; top:0; left:0; bottom:0; right:0; width: 100%; height: 100%;border: none;" src="https://www.youtube.com/embed/vs6buio8wGs" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen>
</iframe>
</div>

 


## **Final Thoughts**

 

The DSCR loan market provides a valuable financing option for real estate investors, but it’s also an area where deceptive practices are on the rise. If you’re an investor, staying informed and vetting lenders carefully is crucial to avoiding scams.

 

At **OfferMarket**, we prioritize transparency, competitive pricing, and investor-focused solutions. If you have questions about DSCR finance or need a trusted lending partner, reach out to us today—we’re here to help you **secure financing with confidence.**

 

## **Grow your rental portfolio with OfferMarket**

 

Month-in, month-out, thousands of real estate investors leverage our platform in the following ways:

 

🏚️ **[Off market properties](https://www.offermarket.us/listings?ref=term-sheet-analyzer)**
💰 **[Private lending](https://www.offermarket.us/loans?ref=term-sheet-analyzer)**
☂️ **[Insurance rate shopping](https://www.offermarket.us/insurance?ref=term-sheet-analyzer)**
💡 **[Market insights](https://www.youtube.com/channel/UCRoNHXFVgI36SV0QQpyf9fw)**

 

We hope you'll accept our invitation to become a member today!

Fake DSCR loan terms are on the rise and many rental property investors, beginner and experienced alike, are falling for it. This guide will help you steer clear of fake loan terms.

*Quote takes 1 minute, no credit pull

*1 quote from 40+ carriers

*New listings daily

Beware of Too-Good-to-Be-True Rates: The Rise of DSCR Lender & Broker Scams

* Takes 2 minutes, no credit pull