Case Study: Building a 10-Property Portfolio with DSCR Loans

Meet the Investor: James Patterson

James Patterson, a 42-year-old IT professional from Texas, grew his portfolio from 2 to 10 rental properties in just 18 months using DSCR financing. Here's his story.

Starting Point

Initial Portfolio:

2 single-family rentals purchased with conventional loans
Combined value: $450,000
Monthly cash flow: $800

Challenge: James's debt-to-income ratio made it nearly impossible to qualify for additional conventional mortgages, despite having excellent credit and substantial savings.

The DSCR Solution

James discovered DSCR loans through a real estate investing podcast and realized it was the perfect solution for his situation:

No income verification required
Each property evaluated independently
Ability to close in LLC name
Faster approval process

The Acquisition Strategy

Phase 1: Months 1-6

Properties 3-4: Houston Suburbs

Purchase Price: $280,000 each
Down Payment: 25%
Monthly Rent: $2,200 each
DSCR: 1.22

James targeted B-class neighborhoods with strong schools and employment centers.

Phase 2: Months 7-12

Properties 5-7: Dallas-Fort Worth

Purchase Price: $320,000-$380,000
Down Payment: 25%
Monthly Rent: $2,400-$2,800
DSCR: 1.18-1.28

Expanded into DFW market for diversification.

Phase 3: Months 13-18

Properties 8-10: Austin Area

Purchase Price: $350,000-$400,000
Down Payment: 25%
Monthly Rent: $2,600-$3,000
DSCR: 1.15-1.25

Completed portfolio with Austin-area properties.

The Numbers

Portfolio Summary After 18 Months

MetricValue

|--------|-------|

Total Properties10

Total Value$3.2 million

Total Equity$950,000

Monthly Gross Rent$26,400

Monthly Net Cash Flow$8,200

Average DSCR1.21

Key Success Factors

1. Conservative Underwriting

James only purchased properties with DSCR above 1.15, ensuring positive cash flow even with unexpected expenses.

2. Market Research

Focused on Texas markets with:

Strong job growth
Population increases
Landlord-friendly laws
Below-average vacancy rates

3. Property Management

Hired professional property managers early, allowing him to scale without burnout.

4. Strong Lender Relationship

Worked with a single DSCR lender who understood his goals and streamlined the process for subsequent purchases.

5. Adequate Reserves

Maintained 6 months of expenses per property in reserves.

Lessons Learned

What Worked

Starting with lower-priced properties to build experience
Using the same team (lender, property manager, contractor)
Focusing on one geographic area initially
Being patient and waiting for the right deals

What He'd Do Differently

Would have started with DSCR loans sooner
Would have bought a duplex or triplex earlier for better cash flow
Would have negotiated harder on property management fees

James's Advice for New Investors

Start with education. Understand the numbers before making offers.

Build your team. A good lender, property manager, and contractor are invaluable.

Focus on cash flow. Appreciation is a bonus; cash flow pays the bills.

Use DSCR loans strategically. They're perfect for scaling once you've maxed out conventional financing.

Think long-term. Real estate is a marathon, not a sprint.

Ready to Start Your Journey?

James's success story demonstrates what's possible with DSCR financing and a disciplined approach. Whether you're looking to purchase your first investment property or expand an existing portfolio, we're here to help.

Get Pre-Qualified Today and take the first step toward building your rental portfolio.