A 2.1 DSCR on a long-term rental.

My client's local-program playbook, and rent that never misses.

New week! New deals and observations. First off: I know you were expecting seller credit strategies. Still coming, likely next week. I have something more interesting, and more helpful, that I want to share first.

THE LEVER

Say "long-term rental" at a meetup right now and watch the room deflate. Everybody knows they don't cashflow in this market.

One of my clients CLEARLY didn't get that memo. Let's call him Mr. A.

I'm working three refinances with him right now (one closed, one closing, one still in process), dropping rates and pulling cash out. He bought these properties well, but recently, within the last few years. Long-term tenants in every one. And not one of the three underwrites below a 2.1 DSCR. You read that right. Rent more than double the entire payment, on every property. He is cash-flowing, like crazy, on LONG TERM RENTALS. Unheard of in this market, right? WRONG.

Here's what he's doing differently: local assistance programs. We've all heard of Section 8 and seen the Instagram gurus yelling about it. This isn't that. Mr. A does this on GOOD housing. Well constructed, well renovated properties. Beyond the federal program everyone knows, cities, counties, and local nonprofits run their own rental assistance programs, each with its own payment standards and its own pipeline of long-term tenants. I did some digging after seeing his numbers. These programs are common in many areas but most investors have never heard of them. And why would you??

From the lender's perspective, it's simple: a lease is a lease. DSCR counts the rent. Remember our formula from the sixplex letter.

This week: search your city or county plus "rental assistance program." Call whoever runs it and ask two questions: what do you look for in prospective properties, and how do you price?

THE W

THE L

I built some automations on our back end systems, and one accidentally fired off mass emails to clients in the pipeline. Thankfully it was contained to just our team, but still. Had to make some calls and let clients know it was sent in error. Burned a good amount of my Tuesday morning. The lesson: point new automations at yourself before they can touch a client.

ON THE RADAR

1. The Fed hiked last week. First hike since 2023, and they signaled one more this year. Mortgage rates barely blinked, actually a hair lower the next morning. Watch the 10-year, not the Fed.
2. I think there are going to be some amazing buying opportunities soon. I've been talking to colleagues across the industry, and they're thinking the same thing. I'm working on a way to bring off-market deals I come across straight to this letter. More on that soon.

Cheers,
Wyatt

The Leverage Letter | When you know the game, nobody can play you.

Client details anonymized; not a quote or a commitment to lend. All loans subject to credit approval and underwriting. Also in the archive: Airbnb's hangover is your buying window.