Tardus Money Moves · San Diego

Financing the deal you can’t drive to.

Conventional, DSCR, and the interest‑only version almost nobody in this room has been offered. Thirty five minutes, one duplex, this week’s real pricing.

Anything in amber is a note from me to you. It comes out before you stand up.
Brendan Kolesar · NMLS #260655 · Arbor Financial Group, Inc. · Corporate NMLS #236669 · DRE #01845041 · Equal Housing Lender
Illustrative figures. Not a rate quote or a commitment to lend.
Who’s talking

I spent a career inside mortgage banks. Then I left.

Two years as a broker, running my own division of a nationwide brokerage. Self employed, same as a lot of you.
Approved with about 150 banks. I actually use around a dozen. The other 138 are there for the file that doesn’t fit.
I own rentals myself. I’m not selling you something I’ve never signed for.
13
states I’m licensed to lend in
ALAZCA FLGAIL MOOHOK ORPATN TX
Still three answers on this. Your licensing page says 13, your homepage says 14, an Arbor bio says 20. Give me the real number and the real list.
Why this room is different

Everything you’re doing right
makes you look worse on paper.

Aggressive on taxes
Your CPA spends the year making your income look small. A conventional underwriter reads that number and stops there.
Self employed
Two years of returns, a P&L, and a written explanation for anything that moved. Every deposit over a few thousand dollars gets a paper trail.
Retired, or living off assets
You have money. You don’t have a pay stub. Agency guidelines were not written with you in mind.
Running a snowball
Cash moving in and out on purpose is a strategy to you and a red flag to a conventional file.
There’s a loan where you can not have a job, frankly. That’s the one we’re here for.
Part one
01

There are two doors into an investment property.

One of them underwrites you. The other one underwrites the house. Almost everyone in this room has only ever been shown the first one.
Door one

Conventional. Every layer of the onion.

Fannie and Freddie set the rules. Your lender just applies them.
Income documents, credit, assets, debt to income, two years of tax returns.
Anything odd has to be documented. Not explained. Documented.
It is the cheapest money in the country when you fit it. That is the whole catch.
What underwriting is actually asking
“Can this person carry the payment out of documented income?”
Not whether the house works. Not whether the rent covers it. Whether you carry it, on paper, after your CPA has finished.
And then it stops
10
financed properties. That is the conventional ceiling, and there is nothing on the other side of it.
It is not a pricing hit at eleven. There is no product. If your plan is one door a year for the next fifteen years, agency financing runs out on you somewhere around year ten, and it runs out at the exact point your portfolio is finally working. Most people find this out when they are told no.
Door two

DSCR. They underwrite the house, not you.

Credit score and assets. That is the personal side of it, and that is all of it.
No tax returns. No W2. No debt to income calculation. Nobody asks what you do for a living.
The question is the projected payment against the projected rent. If it’s tenanted, they use the lease.
Hit 1.0 or better and it qualifies. No cap on how many you own.
What underwriting is actually asking
“Does this house pay for itself?”
That is the entire test. It is a business purpose loan against a business asset, and it is the reason your tax strategy stops costing you deals.
The only math that matters

Rent, divided by the payment.

Rent, both units
$2,600
Or the signed leases, if it’s tenanted.
÷
Payment, taxes, insurance
$1,888
$1,422 interest, $321 taxes, $145 insurance.
=
DSCR
1.38
Anything at 1.00 or over qualifies.
A $350,000 duplex, 25% down, on the interest only product at 6.5%, which is par pricing off my sheet this week. Nobody asked what I earn. Nobody asked for a return. The house answered the question by itself.
Rent of $2,600, taxes at 1.1% and insurance at $145 are mine, not yours. Send me a real duplex you priced this month and I’ll swap all three for numbers you can defend from the stage.
Before anybody gets excited

Two things I’d rather you hear from me.

Catch one
Most of them want you to own a primary residence.
It is a business purpose loan, so the bank wants to know you already live somewhere else. This one is a gray area and it moves from bank to bank. It is also the thing I get around most often, and there are two people in the story slides who prove it.
Catch two, and it just got easier
The paperwork is light, but it is not zero.
Credit, assets, entity documents, and the mortgage statements. One of my banks just dropped the requirement for a statement on every property you own. Now it is the subject property and your primary. If you own eight houses, that is a real difference in a real week.
Confirm the Loan Stream guideline change is public and quotable before this goes up. If it’s still internal, this becomes “one of my banks” with no name, which is how it’s written now.
Your phones

Interest only. Where are you?

Never heard of it
0
Heard of it, never done one
0
I’ve done one
0
I was told no
0
Scan the code on your way in and this is live on your phone. Answer honestly. Nobody sees your name, and the number on that third bar is the one I care about.
One of yours

“No. No. No.”

She owns several properties. Every one of them conventional. She had heard about interest only and she had already decided, and she told me so more than once.
She heard Heather out anyway. Then she looked at the numbers on her own deal.
She closed an interest only loan last week.
Why I open with her
She is a Tardus client. She may be sitting in this room.
I show people the math and the math always seems to answer the question. It answered hers, and it took about ten minutes after six months of no.
I need her okay directly, not through you, and the correct spelling of her name. If she’ll record thirty seconds on her phone about going from no to closing one, that clip is the strongest thing in the deck and it replaces this whole panel.
Part two
02

Now take the second door and pull one more lever.

About 99% of my investor clients take this and most of them had never been offered it. Here is what it does, and here is what it costs, both.
The product

A thirty year loan. The first ten years, interest only.

It is not a balloon. It is not a teaser. It is a thirty year loan that lets you skip principal for the first ten.
You can pay principal any month you want. You are just not required to.
When you do pay it down, the loan recasts. The payment drops and it stays dropped.
It is a choice about where your cash sits. That is genuinely all it is.
The reframe
Principal isn’t a cost. It’s a savings account with a lock on it.
Nobody in this room is against paying down a loan. The question is whether that money does more inside the house or inside your snowball, and for ten years you get to decide month by month instead of once at closing.
One duplex, three doors

$350,000 duplex, 25% down.

Conventional
DSCR
DSCR, interest only
Rate, par
6.875%
6.375%
6.5%
Monthly payment
$1,724
$1,638
$1,422
What they underwrite
You
The house
The house
Tax returns
Two years
None
None
Versus conventional
—
$87 a month
$303 a month
Par pricing, no points, off my sheet dated 8/28. Taxes and insurance sit on top of all three columns equally. $303 a month is $3,631 a year, on one duplex.
Confirm two things. Your sheet quotes the conventional duplex line at $400k and I applied it to $350k, and your DSCR block says no hit for a duplex over $300k so I used straight 25% down pricing.
The other half of it

Here is what interest only costs you. I’d rather say it than have you find it.

Five years, conventional
$15,738 of principal paid down.
Money you cannot touch without selling or refinancing, but it is real and it is yours.
Five years, interest only
$18,154 of cash in your hand.
Nothing paid down. The balance on month sixty is the same balance you started with.
That is the honest trade and it is closer than people expect, because year one of a thirty year loan is 87% interest anyway. You send $20,693 and $2,731 of it touches the balance. Interest only does not cost you much principal in the first five years. There was not much principal there to begin with.
The part almost nobody knows

Interest only isn’t just cash flow.
It’s a qualifying tool.

DSCR, paying principal
Needs $2,104 of rent to hit 1.00.
$1,638 payment, plus taxes and insurance. Below that rent, the house does not qualify and the deal is dead.
DSCR, interest only
Needs $1,888.
Same house. Same buyer. Same bank. A lower required payment means a lower bar to clear.
There is a whole band of houses, about $216 of rent wide, that fail one way and fund the other.
This is why I ask what the rent is before I ask anything else. On a marginal deal the product choice is not about the monthly. It is about whether there is a loan at all.
The lever inside the lever

Pay some down and the payment drops. Permanently.

Pay $10,000
Pay $20,000
Pay $50,000
New payment
$1,368
$1,314
$1,151
Cash flow, per year, from then on
$650
$1,300
$3,250
On an amortizing loan a lump sum shortens the term and the payment does not move. On this one the payment is the interest on the balance, so the balance drops and the payment drops with it, that month, for the rest of the ten years. Your snowball fires, you recast, and next year’s snowball is bigger. That is the loop.
Ask me this one, so I’ll ask it for you

Yes, there’s a prepayment penalty.

Zero to five years, and it is priced. A longer prepay buys a sharper rate. I quote at three and I’ll show you five if you ask.
Most people land on three years. The penalty is usually six months of interest. On this duplex that is about $8,531.
You can pay down 20% of the principal a year without triggering it. On this loan that is $52,500. Most recasts never come close.
Why it bothers people less than they expect
The penalty only bites if you sell or refinance early.
If you are holding five or six years and then doing a 1031, you are past it. And if rates move enough to make a refinance worth an $8,531 penalty, they moved a long way, and that is a good problem.
Where the $303 actually goes

Five years of the difference.
Two places it could sit.

Inside the house
$15,738 off the balance.
Locked in the wall. It does nothing else for five years and you cannot spend it, borrow it cheaply, or point it at the next property.
Inside your snowball
$18,154 of cash, deployed the way your coach already taught you.
Same duplex. Same tenant. The only thing that changed is which loan you signed at the closing table.
This is the slide that makes the room care and it is the one I can’t finish alone. I need the run from Jackie’s coach: $303 a month into the snowball for five years, against paying it into principal. Give me their number and their assumptions and this panel becomes the punchline instead of a placeholder.
Today, not last year

These three trade places. That’s the point of this slide.

Conventional
6.875%
$350k duplex, 25% down
Cheapest money in the country, if your paperwork fits it.
DSCR
6.375%
No hit for a duplex over $300k
Half a point under conventional this week. Nobody expects that.
DSCR, interest only
6.5%
30 year, 10 years interest only
An eighth over the amortizing DSCR, and $303 a month under the conventional.
Par pricing · my sheet, 8/28/2026 · refreshed the morning of this talk
Three or four years ago DSCR was a full point worse than conventional and the fees were ugly. Today it is even or better. If you priced one of these in 2022 and wrote it off, your information is expired. That is the only reason I put a date on the slide.
Four files that should have died

The guideline says no. The right bank says yes.

The student
First time buyer, no primary residence at all. On paper he could go live in it, which is the whole reason the rule exists. I wrote the file so the story made sense and found the one bank that would read it.
The seller
Had just sold their primary and had nowhere to point at. Textbook decline. Funded.
Jerry
Hated documenting large deposits. Every conventional file turned into a scavenger hunt through his own bank statements. DSCR never asked.
Colin
Cabin in the Blue Ridge Mountains, short term rental. Dead set on a fully amortized loan. Saw the interest only numbers and went the other way completely.
Jerry and Colin are named because you named them. Confirm both are fine with it, and give me the first names and spellings for the student and the seller. Four real people beat two real ones and two anonymous ones.
Why my number comes in lower

It’s structural. It isn’t about anybody being bad at their job.

A mortgage bank
Layers of management, all of whom get paid out of your rate.
Margin is set upstairs and applied to your file. Nobody on your call has the authority to change it. On non‑QM in particular the margin runs wider, because the desk knows you have fewer places to go.
A broker
I set profitability deal by deal.
I shop about a dozen banks against each other and I decide what I make on your file. Roughly 100 basis points of difference, and on this duplex a full point is real money every month for thirty years.
I am not going to sit here and bash other entities. I worked at them for years and there are good people at every one of them. This is a structure problem, and the structure is the reason to at least get a second number before you sign.
If you already own something

There’s a second lien version of this.

You have equity sitting in a property you bought years ago at a rate you would never give up. A DSCR second lets you pull that equity out and redeploy it without touching the first mortgage.
Same underwriting logic. The property carries it, not you.
The honest part
These have to pencil, and they don’t always.
The last time we ran these numbers for this group, nobody moved forward. I’m pricing one right now. If it works this week, it gets a real example on this slide. If it doesn’t, I’ll say so and we move on.
This slide is conditional and it is the easiest cut in the deck. Send me the pricing you were running. If the numbers are not good, we pull it and the talk gets ninety seconds back for Q&A.
One thing to take with you
You don’t need the right time.
You need the right strategy.
01 Conventional underwrites you, and it stops at ten.
02 DSCR underwrites the house, and it doesn’t stop.
03 Interest only buys cash flow, and sometimes buys the approval.
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