Hard money, fix and flip and DSCR loans in DC: your questions answered

It is a mortgage on an investment property that is funded by private institutional investors, not a bank. The decision is based on the property and the deal: its value after renovation or construction, or whether its rent covers the payment. Your job history and debt-to-income ratio are not reviewed.

Washington DC Fix and Flip Loans is the DC-area division of Optimus Capital Corp, a nationwide hard money lender that works only with real estate investors. It is run by Andrew Shanti, Senior Vice President, who has worked in lending and real estate since 2005.

All eight wards of the District, plus the Maryland and Virginia suburbs: Silver Spring, Hyattsville, Bowie, Bethesda, Arlington, Alexandria, Fairfax and the communities around them. Through Optimus Capital Corp we also lend in other states.

Fix and flip loans, DSCR loans for rental property, ground-up construction loans, mid-rehab and completion loans, rental portfolio loans, and commercial loans on multifamily, hospitality, office, industrial and retail property.

Choose a lender that funds most of the purchase and all of the renovation, pays draws promptly, and allows a term long enough for DC permits and historic review. We lend up to 90% of the purchase and 100% of the rehab on terms of 6 to 24 months. See investment property loans in Washington, DC.

It means the borrower will not live in the property. Flips, rentals and new builds for sale are non-owner-occupied, and they are financed with business-purpose loans. Every loan we make is on non-owner-occupied property.

No. We lend on investment property only. The exception is commercial property occupied by the owner’s business. For a primary residence, a conventional NMLS-licensed mortgage broker is the right place to go.

As a rule, no, except on large commercial loans. The one cost before closing on most loans is the appraisal, which you pay to the appraisal company.

Programs begin at a 600 score. Fix and flip loans start at 600 with reduced leverage, while the best terms, 90% of purchase and 100% of rehab, are for scores of 720 or higher. Rental loans are available at 600 with up to 70% loan-to-value.

No. We look at three things: enough cash to buy and carry the property, a property that can cover its payment now or once the work is finished, and a credit record that shows debts are paid on time.

No. These are business-purpose loans and are not reported on personal credit like a conventional mortgage.

As many as your deals support. There is no limit on the number of properties we will finance for one investor.

Yes. We will need the articles of organization, the IRS EIN letter, a signed operating agreement showing each member’s share and, if the LLC is over a year old, a certificate of good standing.

DC charges a recordation tax and a transfer tax on each sale, each at 1.1% of the price under $400,000 and 1.45% at $400,000 or more. Buyers customarily pay the recordation tax and sellers the transfer tax, so on a flip you pay one when you buy and the other when you sell.

A DSCR loan is approved on the debt service coverage ratio: the rent divided by the full monthly payment. We prefer 1.0 or higher. Strong borrowers can qualify below 1.0 with lower leverage, and a no-DSCR program exists at a higher rate.

In the District, a short-term rental license is available only to a person renting out their own primary residence, and a host-absent vacation rental is capped at 90 nights a year. Investment properties and second homes cannot be licensed, so most investor-owned homes in DC are underwritten on long-term rent. Maryland and Virginia counties set their own rules, and several also limit short-term rentals to a host’s primary residence.

Renting a home in DC requires a Basic Business License with a rental housing endorsement, a pre-license housing inspection for one- and two-family rentals, registration with the Rental Accommodations Division, and a certificate of occupancy for buildings of two units or more.

DC taxes most homes, rented or owner-occupied, at $0.85 per $100 of assessed value. The risk for investors is the vacant and blighted classes: a property left unoccupied for 90 days or more must be registered, and is taxed at $5.00 per $100 if vacant or $10.00 if blighted. A property under construction with permits from the last 12 months, or actively listed for sale or rent, can qualify for an exemption, but you have to apply for it.

Most single-family homes, including a home with one accessory unit, have been exempt from DC’s Tenant Opportunity to Purchase Act since 2018, though elderly and disabled tenants under older leases keep their rights. Buildings with two or more rental units can carry TOPA rights that add notice periods before a sale can close. Ask the seller for TOPA documentation before you sign a contract on a tenant-occupied property.

Rent stabilization covers buildings of five or more units built before 1976 unless an exemption applies, such as a natural person owning four or fewer rental units in the District. All units must be registered with the Rental Accommodations Division.

Yes, through our rental loan programs.

Fix and flip loans average up to 21 days and can close in about 7 days when title and insurance are ready. Rental and DSCR loans take about 30 days, appraisal included.

In DC, Maryland and Virginia, a title company or settlement attorney handles the closing. Have yours chosen when you apply.

The minimum is $75,000. The maximum is more than $10 million.

From 6 months to 30 years. Fix and flip loans are 6 to 24 months with interest-only payments. Rental loans are fixed for 5 to 30 years.

Not on fix and flip loans. Rental loans come with a 3-year or 5-year prepayment penalty, the 5-year usually priced about 0.25 to 0.5% lower, or with no penalty at a higher rate.