How Realtors Can Help Clients Buy Unlimited Rental Properties (No Debt Wall)
In this episode, Scott Dillingham reveals the DSCR loan strategy and commercial financing paths that let your investor clients keep buying, deal after deal, without the traditional debt ceiling. Scott introduces a…
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Show notes
Most real estate investors hit a wall after 2-3 properties — their debt ratios are too high and the banks say no. In this episode, Scott Dillingham reveals the DSCR loan strategy and commercial financing paths that let your investor clients keep buying, deal after deal, without the traditional debt ceiling.
Scott introduces a game-changing approach: leveraging special commercial lending programs that apply commercial underwriting to residential rental properties. This method focuses on the property's cash flow—using debt service coverage ratio (DSCR) principles—rather than personal credit or income, allowing clients to secure loans for as many properties as they can cash-flow positively. With rates typically ranging from 4.5% to 7%, plus a modest 2% fee, this option often undercuts B and private lenders while enabling unlimited scaling. Ideal for investors eyeing duplexes or multi-family units, it emphasizes buying stronger cash-flowing assets to maximize loan-to-value (LTV) ratios up to 65% or more, turning potential weaknesses into opportunities for smarter real estate decisions.
Whether you're a broker guiding first-time rental investors or a seasoned landlord expanding your holdings, this episode equips you with actionable tips on financing multiple rental properties through innovative DSCR loans and commercial lenses. Scott stresses structuring deals in corporations for flexibility and highlights how this strategy supports endless portfolio growth without the high fees or restrictions of traditional paths, making it a must-listen for anyone serious about investment property mortgage rates and sustainable wealth building.
Key Takeaways
- Avoid the Debt Wall in Rental Investing: Traditional A lenders cap properties based on debt-to-income ratios, but shifting early to cash-flow-focused options prevents portfolio stagnation and bad deals.
- B Lenders for Expansion: These allow higher debt ratios and more rental income consideration than banks, serving as a bridge for investors needing beyond four financed properties.
- Private Lending Pitfalls: While flexible, expect rates up to 15% and fees from 2-6%, making it a last resort—explore better alternatives first for cost-effective growth.
- Commercial Underwriting for Residential Rentals: Use special programs to qualify for unlimited properties by evaluating each asset's income vs. expenses, often ignoring personal credit for DSCR-based approvals.
- Cash Flow Drives Loan Limits: Lenders cap LTV at levels ensuring positive cash flow (e.g., 65% on weaker properties), signaling the need for stronger investments to unlock higher financing.
- Cost Comparison for Scaling: Commercial rates (4.5-7%) and 2% fees beat B (5-7%, 2-3% fees) and private options, enabling nonstop rental property portfolio expansion at A-lender-like pricing.
Links to Show References
- LendCity Mortgages (for Pre-Approvals and Rental Financing Guidance): lendcity.ca
- Close More Deals Podcast (Subscribe for More Investing Tips): Search on your favorite platform or visit LendCity resources
- (00:00) - - Introduction to Qualifying Clients for Unlimited Rental Properties
- (00:42) - - How B Lenders Help Overcome Property Limits in Real Estate Investing
- (00:59) - - The High Costs of Private Lending for Multiple Rental Properties
- (01:34) - - Unlock Endless Growth with Commercial Underwriting on Residential Rentals
- (02:41) - - Debt Service Coverage Ratio (DSCR) Explained: Cash Flow Over Personal Debt
- (02:57) - - Structuring Unlimited Deals: Rates, Fees, and Corporation Tips
- (03:56) - - Why This Beats Traditional Financing for Portfolio Scaling
Realtor questions from this episode
Why do investor clients hit a wall after a few properties?
Scott says lenders look at the client's income and debts to decide how much they can buy, so eventually the lender says the client has too many properties or the debt ratios do not work. Most brokers then move to B lenders and then expensive private lending.
What is the alternative Scott proposes?
Lenders with a commercial program that review even a residential property through commercial underwriting. Scott says they are not so much looking at debt-to-income ratios, and sometimes not at credit, because they look at the property's income and expenses to decide how much loan it can carry. That lets the client buy unlimited properties.
What are the trade-offs of this commercial approach?
Scott says the loan size is limited by the property's cash flow, so a weak property may be capped at a lower loan-to-value, which he says is a signal to buy something stronger. Most of these lenders want the properties held in a corporation, though not all, and he says the fee is roughly 2%.
Transcript
Transcript of the episode as recorded. Rates, fees and program details are as stated on the recording date and may have changed.
Welcome to the Close More Deals podcast.
Welcome to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm gonna be talking to you about how to qualify your clients for unlimited rental properties. Most brokers don't know this, and so we see rental property clients go bad. So what happens is eventually someone starts buying properties, right? And the lenders look at their income, they look at their debts and they say, okay, here's how much you can buy. So what ends up happening is the client eventually hits a brick wall.
And when they hit that brick wall, the lender then says, sorry, you either have too many properties or your debt ratios don't work. So then what most brokers do is they'll look at the B lenders next, right? That's the next logical step. So the thing with the B lenders is they generally will allow someone to own more properties than what the banks will, and they also allow higher debt ratios and they use more rental income. So quite often the B lenders is a potential you know, solution.
And then from there, they go with private lending. So private lending can be very expensive, many, many fees, but they don't care. They'll do the deal. It's it's good to go. I'm here to present a way better solution than all of that for you. But before I do, I just wanna like break down sort of how it works. So on the a lending side, you can expect rates. This is the 2025. You can expect rates anywhere from four to 5% for rental properties.
B lending you could expect five to seven and privates you could suspect seven to I've seen as high as 15, right? Depending on the lender. So keep that in mind. So what I'm proposing to you is to tap into some of our special lenders that have a commercial program where they will review a property, even if it's a residential property, but they'll run it through the lens of the commercial underwriting, And by doing that, your borrower can ultimately get unlimited properties.
Now, a couple things shift.
Now, a couple things shift. When we're looking at this type of lending, they're not so much looking at debt to income ratios, and sometimes they're not even looking at credit. I've had clients with low credit scores qualify for this, because what the lender's looking at is the property. So they look at the income and the expenses of the property, and they determine how much of a loan that that property can carry. So that's the weak spot I would say, on the commercial loans is it's based on what the property can carry.
So for an example, if you're buying a property and the lender comes back and says, Oh, you can only get 65% LTV. You know, a lot of clients may not like that, but on the flip side, if you look at it and you realize you're only being restricted on the LTV because the property's cash flow is weak, right? That's a signal. Okay, maybe I should buy something that's better, right? Buy something that's stronger. So, know, pros and cons there, but ultimately that's how it works.
They'll lend you up to the point of the positive cash flow, maintaining that there is cash flow. And they'll do it unlimited times. Most lenders do want these to be in a corporation, but not all of them. Now I know I went over the rates of the different classes. So the commercial lending I find is four and a half percent to six and a half to seven, depending on the property value. So it is within range where it could be like an a lending deal or it could be sort of priced in the B lending side depending on what's going on.
So that is the range there. Now keep in mind too, if you're going with a B lender or alternative lender, you can also expect a two to 3% fee. Private lending can be anywhere from like two to 6% fee, where on commercial, I find it's roughly a 2% fee. So keep that in mind, obviously residential has no fee, so that's ideal. We wanna go there first, but using this method that I'm teaching you here, your clients will be able to qualify for unlimited properties at cheaper rent lenders than their B lenders or their private lenders that they've been going to, and they can just grow their portfolio nonstop. Looking forward to hearing from you. Check the show notes for more details and resources. Thank you, guys. Looking forward to seeing you next week.