Grow your real estate investing business with the most competitive and transparent private lender for bridge loans (hard money, fix & flip, rehab, ground up construction), DSCR rental loans.

Private Lender for DSCR Loans and Fix & Flip Loans | OfferMarket

Private Lender for DSCR Loans and Fix & Flip Loans

[Net Operating Income](https://offermarket.us/real-estate-glossary/noi-net-operating-income) ("NOI") ÷ Current Market Value

 

Cap rates are a core quantitative metric used by real estate investors to assess the attractiveness of a rental property. It is also used by real estate sellers to set an appropriate asking price for rental investment properties. To standardize cap rate calculation for all investors, mortgage related fees including interest expenses are not included in cap rate calculation.

 

The higher the cap rate, the better. Investors often compare cap rates to the risk free rates of 30 year United States Government Treasury Bonds. Prevailing Cap Rates tend to be lower in competitive markets and for high demand and high conviction asset classes. For example, ecommerce distribution center cap rates should be expected to be lower than cap rates for retail strip mall assets because investors are concerned about the viability of strip malls and bullish on the growth prospects for logistics assets that service ecommerce.

 

### Example

 

A multi-family rental property with NOI of $100,000 and a current market value of $1,000,000 has a cap rate of 10%. NOI is all revenue including rental income, parking fees, service charges, amenities fees minus all operating expenses. Depending on lease terms and management structure, operating expenses can include property management fees, insurance, maintenance, property taxes and utilities.

Capitalization Rate ("Cap Rate") = Net Operating Income / Current Market Value. Learn how to calculate cap rates.

Cap Rate - Capitalization Rate - Real Estate Glossary - OfferMarket

What is Cap Rate in real estate?

## What is an iBuyer?

 

iBuying means "instant buying" and is a type of home sale transaction where the iBuyer (see list of well-known iBuyers below) provides a real cash offer and closes in as little as 7 days or with some flexibility on your timeline. The iBuyer then sells your home for a higher price either through the [MLS](https://www.offermarket.us/real-estate-glossary/multiple-listing-service) or to institutional rental property investors.

 

While selling your home to an iBuyer is convenient and easy, you will most certainly leave money on the table compared to a true marketplace transaction. iBuyers provide below market offers and charge a service fee which is used to cover transaction costs and repairs. If you sell your house to an iBuyer, you should expect to receive as much 10% - 15% below the net proceeds you would otherwise receive on a competitive marketplace.

 

### iBuyer Competitors

 

- [RedfinNow](https://www.offermarket.us/blog/redfinnow-competitors)
- [Opendoor](https://www.offermarket.us/blog/opendoor-competitors)
- [Offerpad](https://www.offermarket.us/blog/offerpad-competitors)
- [Zillow Offers - Program Shut Down in 2021](https://www.offermarket.us/blog/zillow-offers-competitors)

 

OfferMarket is a ZERO commission marketplace and iBuyer alternative for sellers who want to compare multiple offers from verified cash buyers and sell fast and conveniently for higher net proceeds.

 

### Related reading:

 

 

- [RedfinNow Competitors](https://www.offermarket.us/blog/redfinnow-competitors)
- [Opendoor Competitors](https://www.offermarket.us/blog/opendoor-competitors)
- [Offerpad Competitors](https://www.offermarket.us/blog/offerpad-competitors)
- [Zillow Offers Competitors](https://www.offermarket.us/blog/zillow-offers-competitors)
- [Selling A House AS IS](https://www.offermarket.us/guides/selling-a-house-as-is)
- [Sell My House Fast](https://www.offermarket.us/blog/sell-my-house-fast-day)

iBuying is short for "instant buying" and is a term used in the real estate industry for fast cash offers for your house.

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iBuying - Definition - Real Estate Glossary - OfferMarket

What is iBuying in real estate?

## What does DSCR mean?

 

**DSCR** means *Debt Service Coverage Ratio*. DSCR is a ratio calculated by taking a rental property's operating income and dividing it by the cost of a loan. DSCR is a metric private lenders and commercial lenders use to determine the amount of a loan they are willing to provide for a single family or multi-family rental property.

 

## How do you calculate debt service coverage ratio?

 

Use our handy [DSCR Calculator](https://www.offermarket.us/tools/dscr-calculator) to quickly and accurately determine DSCR and maximum loan amount!

 

## Method 1: Net Operating Income ÷ Debt Service

 

### Key:

 

**Net Operating Income ("NOI")** = Rent Revenue - Taxes - Insurance - HOA Dues - Maintenance - Property Management

 

Debt Service = Mortgage Principal + Mortgage Interest

 

A DSCR of 1.0 means the property generates exactly net operating income to cover the cost of mortgage payments. 

 

## Method 2: Adjusted NOI ÷ PITIA

 

**Adjusted NOI**: Rent - Maintenance - Utilities - Property Management 

 

**PITIA**: Mortgage Principal + Mortgage Interest + Taxes + Insurance + HOA Dues

 

This second method tends to result in slightly lower DSCR, so it's important to understand how your private lender calculates DSCR.

 

## DSCR Example

 

Let's say you own a rental property that generates $30,000 in NOI and the monthly mortgage payments (principal and interest) are $2,000 or $24,000 annually. That means the property has a DSCR of 1.25.

 

## What debt service coverage ratio do private lenders require?

 

Private lenders typically require a DSCR of 1.2 or higher to make sure the income generated by the property can conservatively repay the loan. 

 

## How does DSCR relate to LTV?

 

DSCR varies based on the target [LTV (loan-to-value)](https://www.offermarket.us/real-estate-glossary/ltv) because the amount of the loan impacts the debt service component of the ratio.

 

## Learn about Private Lenders

 

Read [The Ultimate Guide To Real Estate Private Lenders](https://www.offermarket.us/blog/real-estate-private-lenders) to learn everything there is to know about working with private lenders to grow your real estate investing business.

 

## Looking for a Private Lender for Bridge Loans and DSCR Rental Loans?

 

 Get approved by [OfferMarket Capital](https://www.offermarket.us/capital), our private lending division.

Debt Service Coverage Ratio ("DSCR") = NOI ÷ (Mortgage + Taxes + Insurance). Learn how to calculate  DSCR.

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Debt Service Coverage Ratio (DSCR) - OfferMarket

What is Debt Service Coverage Ratio ("DSCR") in real estate?

Revenue - Operating Expenses

 

Net Operating Income is used to calculate capitalization rate ("cap rate"), a fundamental quantitative valuation metric for real estate investing.

 

Depending on the type of real estate, revenue can include: 

 

- Rental revenue
- Service fees
- Parking revenue
- Vending machine revenue

 

Operating expenses include:

 

- property management
- vacancy
- uncollectible rent revenue
- insurance
- property taxes
- maintenance

Net Operating Income ("NOI") = Revenue - Operating Expenses. Learn how to calculate NOI.

NOI - Net Operating Income - Real Estate Glossary - OfferMarket

What is Net Operating Income ("NOI") in real estate?

## What is USPAP?

 

USPAP stands for the **Uniform Standards of Professional Appraisal Practice**. USPAP is the ethics and performance standards for the entire appraisal profession (not just real property) in the United States.

 

## When was USPAP created?

 

USPAP was established by the United States Congress in 1989 through the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

 

The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) is established in Title XI of FIRREA to serve as a government watchdog for appraisal standards vis-a-vis the Appraisal Foundation (TAF).

 

## What is the Appraisal Foundation?

 

The Appraisal Foundation (TAF) contains two divisions:

 

1. Appraisal Standards Board (ASB)
2. Appraisal Qualifications Board (AQB)

 

## What is the Appraisal Standards Board?

 

According to the Appraisal Foundation, the Appraisal Standards Board (ASB) is responsible for writing, amending, and interpreting the Uniform Standards of Professional Appraisal Practice (USPAP).

 

## What is the Appraiser Qualifications Board?

 

According to the Appraisal Foundation, the Appraiser Qualifications Board establishes the Real Property Appraiser Qualification Criteria (Criteria), or the minimum education, experience and examination requirements for real property appraisers to obtain a state certification.

 

## 15-Hour National USPAP Course

 

The **15-Hour National USPAP Course** is required in order to become a real property appraiser in the United States. 

 

## 7-Hour National USPAP Update Course

 

Real property appraisers must complete the **7-Hour National USPAP Update Course** on a bi-annual basis (every 2 years). 

 

## Who makes USPAP changes?

 

The Appraisal Standards Board (ASB) is responsible for amending USPAP.

 

## Who regulates the appraisal industry?

 

Each US state or territory has a State Appraiser Regulatory Agency that is responsible for certifying and licensing and supervising real estate appraisers according to federal mandates.

 

While the appraisal industry is enforced at the state level, there is oversight from the federal government through the Congressionally appointed Appraisal Foundation which sits under the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC).

 

## Who must follow USPAP?

 

All appraisers of real property must follow USPAP.

 

## Who writes USPAP?

 

The Appraisal Standards Board (ASB) is responsible for writing USPAP.

 

## USPAP resources

 

- [The Appraisal Foundation](https://www.appraisalfoundation.org/)
- [Appraiser Qualifications Board](https://www.appraisalfoundation.org/imis/TAF/About_Us/TAF_Boards_and_Panels/Appraiser_Qualifications_Board/TAF/Appraisal_Qualifications_Board.aspx?hkey=e82a999c-c8bb-4118-af4d-3d15fd7f799c)
- [Appraisal Standards Board](https://www.appraisalfoundation.org/imis/TAF/About_Us/TAF_Boards_and_Panels/Appraisal_Standards_Board/TAF/Appraisal_Standards_Board.aspx?hkey=68746225-2dda-4982-9dc5-c5cb6d235e66)

 

## Related real estate terms

 

- [Collateral Desktop Analysis](https://www.offermarket.us/real-estate-glossary/collateral-desktop-analysis)
- [ISAOA/ATIMA](https://www.offermarket.us/real-estate-glossary/isaoa-atima)

USPAP stands for Uniform Standards of Professional Appraisal Practice. USPAP is the ethics and performance standards for the entire appraisal profession in the United States.

USPAP means Uniform Standards of Professional Appraisal Practice