DSCR Loans for Real Estate Investors: How to Finance Rentals Without Traditional Income | Adam Young

Adam Young (00:00)
Yeah, one of the best forms of financing is a DSCR, so a Debt Service Coverage Ratio loan. That is a product that you don’t have to show income; you just show assets and some other things. And at the end of the day, if the mortgage payment matches up with what the potential rent capabilities are, then we’re good to go.

Freddie Steen (01:51)
Hey everyone. Welcome to the Investor Fuel Podcast brought to you by Real Estate Pros. I’m your host, Freddie, and today I’m joined by someone I’ve been looking forward to chatting with: Adam Young of Capital City Home Loans, based out of the sunny state of Florida. Big fan of the SEC, big fan of the Big Ten, but what we have in common, real estate pros, is that we love to dive in

about operators and industries in the real estate space. For Adam, he actually has a gifting and understanding in funding mortgages at whatever place of the real estate spectrum you may be. You may be a fix-and-flipper, you could be a BRRRR method, you could be any of the asset classes—he has expertise in all those areas. But let me dive in. Our listeners are really going to take something away

from how you’re approaching being an operator, a real estate investor yourself, and also capital raising, and doing that in multiple markets. Let’s dive in. First off, people who may not be familiar with your world, give us the short version. What’s your main focus these days, Adam? And what markets are you operating in?

Adam Young (02:57)
Yeah, really—well, first and foremost, Freddie, really appreciate the opportunity to jump on the podcast. Great opportunity, and I look forward to having a good conversation with you here today. So my main market that I work in is in Tallahassee, Florida. But I can also take care of customers that are in eight states, which are Florida, Alabama, Georgia, Mississippi, the Carolinas, Tennessee, and Virginia.

But back to what you said about the SEC, fortunately or unfortunately, FSU is in the ACC. But Go Noles, either way.

Freddie Steen (03:29)
Adam, what unique challenges or opportunities does the Tallahassee real estate market present right now?

Adam Young (03:35)
It’s a competitive market like all across the country, you know, with elevated mortgage rates. And the inventory’s growing, I will say that. But at the end of the day, you know, the competition in the mortgage space is pretty thick, but at the end of the day, it doesn’t change what the job entails. And that’s always staying in front of as many people as we possibly can to support our community through homeownership.

Freddie Steen (03:54)
I’m sorry, I forgot to ask: How did you transition your career specifically into construction finance?

Adam Young (04:02)
Great question. So one of the biggest things that I love doing is working in the construction-to-perm space. It is a loan type that we have a few different options to give out to our buyers. But essentially, what I love about it is being able to watch a buyer that I’m representing customize their own home, all the while we’re walking them through each draw and what the permanent side of it looks like, and a lot of other different features that

buyers need to be educated on when it comes to that particular loan program.

Freddie Steen (04:33)
What’s the biggest misconception investors have about the local Florida Panhandle market?

Adam Young (05:28)
You know, I think that there are enough homes to go around. And if you’re an investor looking to, for lack of better words, invest in real estate, I think it’s always a good time because, you know, real estate is a long-term play. It’s a long-term play for everyone who is buying a house. I specifically deal with a lot of first-time homebuyers, and I always teach them—I have a client right now who,

you know, they have some pretty high standards for what they’re looking to get into, but it might be a little bit outside of their comfort zone financially. So I’m always trying to educate my buyers into what could be maybe a little bit of a better fit in regard to helping them understand how your first home may not be your last home. Your first home is potentially gonna set you up to potentially be an investor,

or it could also potentially set you up for another house down the road with your family potentially growing, correct? Right.

Freddie Steen (06:25)
That’s correct.

Love it. Adam, what type of trends are you seeing going into 2027 in the Tallahassee market?

Adam Young (06:32)
You know, I tend to think that this is actually, you know, a national thing, but I’ll break it down for Tallahassee specifically. A lot of buyers these days are getting seller credits in some way, shape, or form. Now, we can call them seller concessions, we can call them repairs. You can break it down in a number of different ways, but a lot of folks that I’ve been able to help this year have been given either money toward their closing costs, or they’ve been given a new roof,

or they’ve been given a new HVAC system, so on and so forth. So are we necessarily seeing a buyer’s market? I’ll let the local Realtors tell you that. But what I’ll tell you is that I think there’s a high percentage of folks who are getting a seller credit. Now, going into 2027, if things stay the way that they are currently, then I don’t see that particular thing that I just mentioned changing. And so if I’m a buyer in this market, I would ask.

I would ask for either the repair if you want a repair. You may not get it, but it’s always negotiable. Or you can take on the amount of money that you think is relevant to ask for in order to put towards your closing costs, in which case you could save thousands of dollars.

Freddie Steen (07:41)
What caught attention about you, Adam, was the way you’ve been able to leverage this experience in construction perm financing with your own operation as a real estate investor in multiple markets while keeping margins strong. And that’s not easy, especially in this climate. What’s been the key to keeping that machine running smoothly?

Adam Young (08:03)
I think in the mortgage space, what keeps the engine running smoothly is continuing to get out in front of everybody. Get out in front of your community. Tell them how you can help them. I think the biggest point of education that I could ever give to anyone who is potentially looking to get into the real estate space is to just simply have conversations with your local lender who you appreciate that can educate you on all the different things that we could potentially do.

You mentioned construction perm, right? So let’s say that you’re ready for a bigger home you’ve already constructed. My parents did this as I was growing up. We built two different houses. And my parents, after I had left the nest, if you will, had built another two. Well, my dad appreciated it, right? He would sell the first when I was twelve years old, and we ended up building another one, right? But what people can do is sell that property, make the money from the proceeds,

move it to the next. Or two, they can rent that property out, and there’s obviously guidelines we have to follow from that. But there are a number of different things that people can do that, if you can put your mind to it, we can find a way to give the money or provide, if you will, the funding to help that particular person out with what they’re trying to accomplish.

Freddie Steen (09:19)
Now every operator I know has a moment where things got real. Maybe a deal that went sideways or a time that they had to pivot fast. You mind sharing one of those moments for you?

Adam Young (09:29)
You know, I think there are definitely times when we have to maybe reset expectations for borrowers. There may be times where there’s a client who is not being given appropriate information and they come from another lender. I think the biggest thing that we can always do is just stay locked in with our guidelines, continue to learn what guidelines we need in order to make people’s day at the closing table.

Freddie Steen (09:54)
No, that’s the kind of stuff people don’t talk about enough. And honestly, it’s what separates the folks who just dabble from the ones who stay in the game long term like you.

Adam Young (10:03)
No.

Freddie Steen (10:04)
Adam, what are you most focused on solving or scaling next? What’s the next real goal for you?

Adam Young (10:11)
When it comes to scaling my personal business, there are a lot of people out there who really want to buy real estate. Now, and I’m gonna allude to this in just a second to the first part of your comment/question: I think for anybody in the real estate space or anybody in the mortgage space, you just gotta continue to call your past clients, to get in touch with people as much as humanly possible.

It’s a referral-based business, let’s just be honest, right? You do good work for somebody, then they’re gonna pass your name on to somebody else. Now you continue to do that for folks, and if you’re in the game long enough, in the business long enough, then those folks are gonna come back to you. I was talking to a real estate agent who’s got over twenty-five years of experience, a broker at her own individual company, and it was great and enlightening that with her experience and her tenure,

she’s got people that are coming back that have purchased three or four homes with her, right? But the biggest thing, again, going back to some of the things that we’ve talked about, what I love about real estate, what I love about it in general, is how it helps you accrue wealth, right? You can go from one house to another, take proceeds to another, or you can leverage debt and have somebody else pay your mortgage for you by being a landlord. There’s a lot of different ways that you can build wealth

through real estate, as long as you are educated in what you can accomplish and how it can help your financial goals. My goal is to be like the individual I mentioned, twenty-five years deep and having people buy four houses with me. That’s the goal in my business.

Freddie Steen (11:41)
I have to say, one, relationships are everything in this space, and you can’t fake what you just said. Now I know a lot of people listening are either early in their journey or looking to level up like you, and they benefit from hearing this. Adam, when it comes to building relationships and growing your network, what’s made the biggest difference for you?

Adam Young (12:01)
Authentic. Be genuine. Don’t BS people, because everybody can see right through it. The way to do business is to simply be authentic, be honest, help people. The more you literally put yourself out there, the more authentic people can see of you through either your actions of just being in front of them or simply what you’re putting on social media.

People can see right through it if you’re not being that way. You’ve really got, if you’re gonna be in this business, whether it’s on the real estate side, whether it’s on the lending side, whatever it is, genuinely care for people. Genuinely care for people. Put yourself out there in a genuine fashion and have their best interest at heart, period. But be authentic. Don’t BS people.

Freddie Steen (12:44)
Yeah, you can’t fake that. Adam, how do you evaluate a builder’s credibility and financial health before approving a project?

Adam Young (12:52)
You know, the beauty of that side of things is that we have some people in our operations department that will handle that aspect for me. There’s obviously some certain guidelines that we need to fit—that we need to meet, I should say. So if they’re not gonna pass the test, per se, then we move on and direct our clients to an appropriate builder who we know, one, has the creditworthiness to move forward for us, but two, is also gonna provide a good product.

Freddie Steen (13:18)
Can seasoned pros scale their portfolio using creative financing?

Adam Young (13:22)
Yeah, one of the best forms of financing is a DSCR, so a Debt Service Coverage Ratio loan. That is a product that you don’t have to show income; you just show assets and some other things. And at the end of the day, if the mortgage payment matches up with what the potential rent capabilities are, then we’re good to go.

Freddie Steen (13:44)
Awesome. That’s perfect. Now, before we wrap, Adam, I have to ask: If someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Adam Young (14:39)
To direct people to my own personal website that I’ve put together in the recent past, it’s called YourLocalTallahasseeLender.com. It has stuff about me. It has a mortgage calculator. It has the process on it, and I’m continuing to build on that. And so I would direct people to that because it has my phone number, my email, my Insta, my Facebook, all the things you need to see about me and my personal business and how I can help you. That’s where I would direct folks to.

Freddie Steen (15:06)
Perfect. Well listen, I appreciate your time, your story, and your perspective. We need more people in this space who are doing it the right way. Thanks again for being here, Adam.

Adam Young (15:16)
Thanks so much, Freddie. I really appreciate your time as well.

Freddie Steen (15:18)
Gratitude. And for those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Adam Young, who are out there building real businesses. We’ll see you on the next episode.