Debt-Service Coverage Ratio - DSCR - DSCR measures how much income a property produces compared to its debt payments - Lenders use DSCR to determine whether rental income can support the loan - It is also a measure investors should be familiar with to help with early deal valuations 🏠 Scenario: An investor buying a 4-unit property with projected rents of $6,000/month and a mortgage payment of $5,000/month - Rental Income by unit: ($6,000/4) = $1500 per unit - Monthly Mortgage: = $5,000 between... PITIA - Principal Mortgage Payment - Interest - Taxes - Insurance - Association Fees In this scenario we see a DSCR of 1.20 - ($6,0000/$5,000) - 1.20 Deal will qualify for most DSCR programs - 1.00 & below options become limited and pricing increases (The property also isn't cash flowing appropriately)

🏠 Treasury Yield Updates 5-Yr UST Yield: 3.842% 10-Yr UST Yield: 4.268% Why is this important? - Treasury yields don’t set private lending rates but they set the minimum return expectations for capital. It is important to understand that there is a reason rates are where they are. - Typically for every 20 basis point swing, rates will move 1/8th in the corresponding direction. In the last week rates have held steady with no real movement in any direction. 📈 Industry Headlines • Home Buyers Finally Catch a Break : The discount for buyers continues! The average discount homes sold for below listing price was around 8%. • Rent-To-Own: High amount of unsold inventory (houses), builders have introduced an idea to have renters pay above market rent to escrow money to be used as a down payment on the home they are renting. 📘 What You Should Know (Opinion) Though we are seeing a discount among sales for buyers, we are also seeing a large majority of the buyers market being excluded from transactions solely due to the high starting price of these homes. When the price starts high, a whole group is ultimately excluded from the market which in turn creates a housing surplus of high priced homes. This is what gives that smaller group of buyers bargaining power.

Why Mortgage Rates Follow the 5-Year & 10 Year U.S. Treasuries (Not the Fed) - Many people assume mortgage rates move when the Fed cuts or hikes rates. In reality, mortgage rates are more closely tied to the 5-Year U.S. Treasury as well as the 10-Year U.S. Treasury Here’s why: - Mortgage-backed securities (MBS) compete with 5 & 10-Year Treasuries for investor money. When the 5 or 10-Year yield rises, investors demand higher returns on mortgages and this pushes mortgage rates up. When it falls, mortgage rates usually follow. How this shows up today: - Even when the Fed signals rate cuts, mortgage rates may stay elevated if the 5 & 10-Year Treasury remains high. Borrower takeaway: - If you’re watching rates, track the 5 & 10-Year Treasuries not just Fed headlines. 💬 Was this new information to you?