Hard money and DSCR loans in the Smokies: 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: whether its rent covers the payment, or its value after renovation or construction. Your job history and debt-to-income ratio are not reviewed.

Gatlinburg Hard Money Loans is the Smoky Mountain division of Optimus Capital Corp, a nationwide hard money lender that works only with real estate investors. The team is Andrew Shanti, Senior Vice President, and Collin Cook, Senior Account Executive.

Our focus is Sevier County: Gatlinburg, Pigeon Forge, Sevierville and Wears Valley. We lend throughout Tennessee, including Townsend, Knoxville, Chattanooga and Nashville. Through Optimus Capital Corp we also finance property in other states.

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

The answer depends on the property. For a rental cabin, choose a DSCR lender that counts nightly rental income and lends on log cabins and condos. For a new build or a flip, choose a hard money lender that funds the work and closes quickly. Gatlinburg Hard Money Loans offers both and lends only on non-owner-occupied property. See investment property loans in Gatlinburg.

It means the borrower will not live in the property. Rentals, flips 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. Rental loans are available at 600 with up to 70% loan-to-value. Fix and flip loans also start at 600 with reduced leverage, while the best terms, 90% of purchase and 100% of rehab, are for scores of 720 or higher. Why a score is low can affect what is offered.

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.

Yes. Many cabin investors in Sevier County live elsewhere. You can borrow in your own name or through an LLC.

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.

On projected annual short-term rental income, using 12 months of history or AirDNA projections, and not on long-term market rent. Call (954) 598-4564 for a free analysis of a particular property.

Yes. Log cabins and chalets are financed as standard rentals. Non-warrantable condos and condotels can be financed too, usually at slightly lower leverage.

In most of Sevier County, yes. Gatlinburg issues a Tourist Residency Permit, Pigeon Forge and Sevierville have their own permits, and cabins outside the city limits need a Sevier County short-term rental unit permit with a yearly fire inspection. Zoning and covenants decide whether nightly rental is allowed at all, so check the specific address.

Yes. Property tax is part of the monthly payment used in the DSCR. Sevier County assesses a short-term rental that is not the owner’s primary residence at the 40% commercial ratio instead of the 25% residential ratio, so use the rental tax figure, not the current owner’s bill.

Yes, through our rental loan programs.

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

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.