DSCR Portfolio Expansion
Scaling a rental portfolio from 4 to 16 properties without income documentation.
Deal Overview
| Property Type | Single-family rentals |
| Location | Baltimore Metro, Maryland |
| Strategy | Portfolio acquisition and scaling |
| Total Financing | $2.8M across 12 properties |
| Timeline | 14 months |
The Situation
A Baltimore-area business owner had built a small rental portfolio of 4 single-family homes over several years, financing each with conventional mortgages. The properties performed well, generating consistent cash flow and appreciation.
The investor wanted to scale aggressively—acquiring 10-15 additional properties within 18 months to build passive income toward early retirement. However, conventional lending had become a barrier.
The challenge: As a self-employed business owner, the investor's tax returns showed minimal net income due to legitimate business deductions. Conventional lenders—focused on W-2 income and debt-to-income ratios—wouldn't approve additional mortgages despite strong liquidity, excellent credit, and proven property management experience.
The Challenges
Self-employment income
Tax returns showed $62K net income despite $180K+ actual cash flow, disqualifying conventional financing
Conventional loan limits
Already at 4 mortgages; conventional lenders cap most borrowers at 10
Speed requirements
Competitive Baltimore market required ability to close in 2-3 weeks
Scale ambitions
Goal of 12+ additional properties required a repeatable financing solution
Our Approach
Brookmont structured a DSCR-based acquisition strategy:
1. DSCR Loan Program
We connected the investor with DSCR lenders who underwrite based on property cash flow—not personal income. Each property qualified independently based on its rental income covering the mortgage payment.
2. Pre-Qualification Pipeline
We established relationships with two DSCR lenders, creating a pre-qualification framework that allowed fast execution on new acquisitions.
3. Portfolio Refinance
We refinanced two existing properties from conventional to DSCR loans, freeing up conventional loan capacity for owner-occupied or other purposes.
The Financing Structure
Individual Property Example
| Purchase Price | $185,000 |
| Down Payment (25%) | $46,250 |
| Loan Amount | $138,750 |
| Monthly Rent | $1,650 |
| Monthly PITIA | $1,285 |
| DSCR | 1.28 |
7.25% fixed (30-year)
75%
3-2-1 step-down
18 days
Bank statements, lease, appraisal only
Full Portfolio Summary
| Properties Acquired | 12 |
| Total Purchase Price | $2,340,000 |
| Total Loan Amount | $1,755,000 |
| Total Down Payment | $585,000 |
| Average DSCR | 1.24 |
| Monthly Gross Rent | $19,200 |
| Monthly Debt Service | $15,420 |
| Monthly Cash Flow | $3,780 (before expenses) |
The Execution
Months 1-3: Foundation
- Established DSCR lender relationships and pre-qualification
- Refined acquisition criteria (neighborhoods, property types, rent ranges)
- Acquired first 3 properties
Months 4-8: Scaling
- Closed 6 additional properties
- Streamlined due diligence and closing process
- Average time from contract to close: 21 days
Months 9-14: Optimization
- Acquired final 3 properties
- Refinanced 2 existing conventional loans to DSCR
- Implemented property management systems for 16-unit portfolio
The Outcome
| Metric | Before | After |
|---|---|---|
| Total Properties | 4 | 16 |
| Portfolio Value | $680,000 | $3,020,000 |
| Total Debt | $425,000 | $2,180,000 |
| Total Equity | $255,000 | $840,000 |
| Monthly Gross Rent | $5,400 | $24,600 |
| Monthly Cash Flow | $1,200 | $4,980 |
| Annual Passive Income | $14,400 | $59,760 |
The investor quadrupled their rental portfolio in 14 months, building nearly $60K in annual passive income—without ever providing a tax return or income documentation to a lender.
Key Takeaways
1. DSCR unlocks self-employed investors
Tax-efficient business owners shouldn't be penalized by conventional income documentation requirements. DSCR loans evaluate the investment, not the investor's W-2.
2. Scalability is built-in
Unlike conventional loans (capped at 10), DSCR programs have no portfolio limits. If the deal cash flows, it qualifies.
3. Speed enables deal flow
With pre-established lender relationships, 2-3 week closings became routine—critical in competitive markets.
4. Entity ownership from day one
All properties were acquired in LLCs, providing liability protection without the need to transfer title post-closing.
This case study represents a representative transaction. Specific details have been modified to protect client confidentiality.