Unlocking Generational Wealth: How DSCR Loans Transform Real Estate Investing

John Harcar (00:00.782)
Hey, all right, guys. Welcome back to our show. I’m your host, John Harcar. And I’m here today with Janice Gilbreath. And what we’re going to talk about is her journey in real estate and really focus at the end about what a DSCR loan is and why it’s important for investors. Remember, guys, at Investor Fuel, we help real estate investors, service providers, mean, really all real estate entrepreneurs, 2 to 5X their business by providing tools and resources to build the business they want to build, which

help some live the life they’ve always dreamed of. Janice, welcome to our show.

Janice Gilbreath (00:31.684)
Hmm.

Janice Gilbreath (00:35.662)
Hey, thanks for having me, John.

John Harcar (00:38.188)
Yeah, I know we had a little hiccup the first time and you I apologize, but I’m glad we got to to get this set back up and I’m excited to talk about, know, our topic today, you know, especially DSCR loans, having a rental, etc. But before we get into all that stuff, tell our audience a little bit about you, kind of your background, your journey in real estate and what got you to today.

Janice Gilbreath (00:43.203)
Yes.

Janice Gilbreath (01:01.476)
You know, John, I came from a real estate family. My dad was a real estate broker and developer in Huntsville back when they were developing for the Marshall Space Flight Center to come here to Huntsville. And it was exciting times. My dad was always late for dinner. You know, that’s back when everybody used to gather around the table about 5.30 or 6. And my mom

John Harcar (01:15.053)
Wow.

John Harcar (01:27.512)
What’s that?

Janice Gilbreath (01:29.846)
My mom would be so mad, but I was always so excited because I’d say, dad, how many houses did you sell today? And he’d say, five, seven. I’m like, whoa, you know, it was exciting times for me.

John Harcar (01:45.166)
Did you ever go on any of these appointments with him? I mean, I know I’ve taken my daughter on one of my appointments before. Did you go on this and learn kind of that way?

Janice Gilbreath (01:55.106)
You know, I did. And one of my most exciting days was on Sunday after church, my dad let me work the open houses for him. And that was always fun times and it was just great. In fact, in one of his neighborhoods, I even have a street named after me. Yes.

John Harcar (02:15.681)
Really? Did he do large developments as well?

Awesome. Okay, so you kind of cut your teeth in real estate when you’re what how young?

Janice Gilbreath (02:27.204)
Probably about seven years old and up.

John Harcar (02:30.957)
Wow, incredible. So that kind of seeded your passion for real estate. So as you grew up, right, you kept sitting around and hanging around your father. When you got into adulthood, when he started your first job, I mean, what did that was that all real estate? How did all that play out?

Janice Gilbreath (02:45.38)
Well, know, people come up to kids all the time and say, you know, what do want to be when you grow up? Well, you know, all I ever wanted to do was sell real estate and be in the real estate world. That’s all I knew. That’s all I had a passion for. And to this day, I still love what I do.

John Harcar (03:05.089)
Why do you love real estate so much?

Janice Gilbreath (03:08.622)
You know, it’s something that people can buy. It is a game changer for ownership. The pride of ownership, the starting of generational wealth. It’s just been something that I love, being able to see people grow that understand buying real estate and having that property.

Ownership is huge. It’s just like the other day. I love what one of my real estate investors posted said Well, I didn’t see my real estate value go down today, you know for the ride while I’ll ride on Wall Street last week So I loved that

John Harcar (03:52.02)
Mm-hmm. Mm-hmm. Awesome. So what was your first, you know, into your own solo real estate away from your father and doing all that? How did you get started that way?

Janice Gilbreath (04:02.584)
Well, I wanted to go ahead and get my license and at that time the state of Alabama would issue a broker license. You did not have to be a salesman for two years. So I’m still on record along with my good friend, Phyllis Brooks, that she comes from a long real estate family also of being the youngest real estate broker in the state of Alabama.

John Harcar (04:32.109)
And that was how old? 18. Yeah, and I think we touched on this a little bit earlier. I kind of classified it as 18 and ageless. Tell our audience a little bit about that story.

Janice Gilbreath (04:34.5)
18, yes.

Janice Gilbreath (04:45.828)
Well, you know, I did get my license and I started, you know, contracts and, know, getting the real estate business started. And then we got notification that I could not do any more contracts because of my age. So at that time I worked for Southern Oaks, Burt Danner, Jimmy and John Hayes. And we went to some attorneys and the fourth attorney said, I’ve got an idea. I’m going to petition the court.

and named Janice Blocker, which was my maiden name, an ageless person. So to this day, John, I am an ageless person.

John Harcar (05:28.309)
that’s a great story. OK, so now let’s keep going on the path. So you’re a real estate broker. What were some of the challenges when you first started that? I mean, obviously we know about this age-18 thing, but what other challenges being your own broker did you have to overcome? And what mindset type of resources did you use or did it take to get over those?

Janice Gilbreath (05:53.134)
You know, back in the day, of course, it was in the seventies, know, women were just really kind of getting their momentum going in the real estate world. And fortunately, I had some great mentors that worked at my company and also other companies. And I am so grateful for how they poured into my business, how they poured into helping me be

extremely successful.

John Harcar (06:24.971)
Yeah, and I’m going back to your show notes here and I said, says, you’re the first woman state president of Alabama’s Mortgage Professional Association. How did that all come about? It sounds like the women’s impact was important to you. So how did all this come about and what kind of drove you to go that path, right?

Janice Gilbreath (06:33.689)
Yes, sir.

Janice Gilbreath (06:47.972)
Well, you know, back to my dad, my dad was one of the first real estate companies to hire women, which I thought was awesome. and I’ve never really done things because I’m a woman. I’ve done things because I wanted to achieve certain standards that I had set for me in my life. the Alabama Mortgage Brokers Association, we started that group.

as really a lighthouse and a watchdog for the mortgage industry back when things were just starting. I lobbied for seven years for the state of Alabama. And it was so interesting because she would sit in congressman’s offices or at that time we had a very influential Senator, Senator Richard Shelby. And we would tell them what a mortgage broker was.

and also about lending in our area and also the challenges that we had. And it was just great to be able to share and to strengthen our industry.

John Harcar (07:59.874)
That is awesome. So in this whole time of real estate broker and you went into mortgage, did you ever own any properties? you ever, you know, did you ever do any flips or did you own any commercial properties, anything like that?

Janice Gilbreath (08:13.144)
Well, at one time I had 13 properties, investment properties, and they were really rentals. They were great rentals. In fact, the other day, my husband and I just went by several of them and they’re in a great location, but we made the decision to take another course. had several businesses going at that time. But if I were to look back, I would have probably said,

hire a good property manager. That’s probably what I would have said to myself at that time. But, you know, we made the decision and it’s, you know, no regrets, but we loved buying and selling. In fact, one of my stories is I even took a down payment to sell one of those duplexes and got a boat and a truck out of it. Yes, yes I did.

John Harcar (09:05.023)
Really? How did that come about? Did they just not have the cash and threw those in the offer, I guess?

Janice Gilbreath (09:12.096)
that they didn’t have the cash and I needed a truck for my son that was turning 16 and my husband wanted a bass boat. So hey, we were able to work it out.

John Harcar (09:23.149)
That is a perfect barter situation. You don’t come across that too often. That’s incredible. lead us into the mortgage part, right? Because I know you’re into doing lending now, but lead us, how did you go from the broker to the mortgage?

Janice Gilbreath (09:42.564)
Well, you know, it is very interesting. I was doing a lot of commercial sales when I lived in Knoxville, Tennessee. Came back home to Huntsville and we had a family business. My mom was sick and I’m like, okay, I’m gonna go into lending and people said that sounds like a good transition because I had been putting together multi-million dollar deals on.

shopping centers or apartment buildings. So it was really a good transition and I just felt like I wanted to go into the lending part. It had always interested me and I’ve been doing it now for over 30 years.

John Harcar (10:12.813)
Mm-hmm.

John Harcar (10:27.223)
Were there any specific struggles or just like mindset shifts that you had to change when you made that flip to mortgage?

Janice Gilbreath (10:38.232)
You know, not a lot, but I worked for a company that all they wanted were like cream puff loans and they would only allow me in the office before nine and after four. So I was taking all the other loans that weren’t working to another company. And after three months, the manager sat me down and he said, do you have any idea?

John Harcar (10:53.709)
Mm.

Janice Gilbreath (11:07.586)
how many loans you’ve given us in three months time. I’m like, no. And when he showed me that I’m like, hmm, that’s more than I made the last three months. So that was my introduction to doing other type of loans besides the cream puffs. You know, I really loved it because it was helping the self-employed person with bank statements. It was helping

John Harcar (11:18.337)
Wow.

Janice Gilbreath (11:36.684)
somebody that, you know, during that time we could even help people pay out of bankruptcy. Right now we do not have that loan available. But those were the type of loans that all of a sudden I’m like, I love helping these people get their lives back on track. So it was a good time. It was a good transition.

John Harcar (11:54.711)
Got it.

That’s awesome. That’s awesome. So let’s talk about what your, you what does your business look like now, right? And before we get into the whole DSCR conversation.

Janice Gilbreath (12:08.952)
You know, right now, there’s still great loans for first time home buyers. And in our area, there’s still a lot of really good inventory for that particular person. Also in our area too, John, we have a lot of veterans. We’re working with a lot of veterans right now that are moving to Hotsville. So, you know, we do a lot of different loans. even work on reverse mortgages.

You know, those help seniors to be able to age at home. And I have a lot of really great scenarios of people that I’ve helped. But I always recommend to people, get good counseling. You know, be able to have someone that will be able to talk to you and talk to your family. But the DSCR, you know, it’s been around quite a while. But

They’re just tweaking that loan now, the last several years, to where it is a excellent loan program for your investors.

John Harcar (13:17.773)
Okay, well just in case some of the folks that might be listening don’t know what DSCR is, why don’t you kind of give them a little rundown?

Janice Gilbreath (13:26.124)
Okay, DSCR stands for Debt Service Coverage Ratio. Now you’re like, hey, what does that really mean? Well, you know, yeah, yeah, what does that mean? Well, what it means is that we are not going to require you to show any type of income, your tax returns or all that.

John Harcar (13:35.309)
Dad, you talking about?

Janice Gilbreath (13:52.64)
It’s purely based on the rental income. So therefore, we’re looking at that service of the rent that is received and then the debt service that you’re going to have on that particular property.

John Harcar (14:13.581)
Okay. Are there qualifications? Do you have to have a certain credit? you is it the price or does it have to be like a 1.25 DCR? What are the qualifications to get this besides just a purchase contract and a property?

Janice Gilbreath (14:30.116)
Okay, so on hours, we do have a minimum credit score of 620. And then when you’re saying what percentage, we look at one to one. So let’s just say the rent is 2000. And then the debt service is 2000 or $1,950, whatever. We did one the other day and we had $11 to spare.

John Harcar (14:58.957)
Hmm.

Janice Gilbreath (14:59.148)
So, you know, we’re continually being able to look at those numbers. And you know, John, I’ve heard some people say, well, you know, I haven’t been able to do a DSCR loan. The thing is, a DSCR loan is a very simple loan, but you have to have your numbers to line up. And since I’ve been in the business so long,

John Harcar (15:27.99)
Right.

Janice Gilbreath (15:28.406)
We work those numbers on the front end, making sure those numbers are going to come out to where you’re able to get that ratio and to be able to work.

John Harcar (15:41.099)
Right. Okay. That makes sense. Is there a specific formula that the folks would come up to or someone would be able to kind of figure out what are these numbers?

Janice Gilbreath (15:51.214)
Well, if we do a loan, we request a form 10-07 from the appraiser. And that 10-07 form gives us a range of the rents for that particular area or neighborhood. We use the middle number for that. Now, you could probably call up some property managers to be able to ask them. There’s all types of

you know, Googling different things, you know, as far as what rents might be in that area. But it’s very important to know where you are. Now, our minimum loan amount is a hundred thousand. So that is, that is the minimum. But as far as one particular investor, they can have unlimited number of properties, unlike

John Harcar (16:35.405)
Mm-hmm.

Janice Gilbreath (16:47.906)
With Fannie Mae or Freddie Mac, you can only have 10 properties.

John Harcar (16:52.429)
Right. Okay. So hypothetically, if it was $100,000 and the rent was $1,150, that would qualify.

Janice Gilbreath (17:06.468)
True, if the debt service was in that range. Now, one caveat on that, if it does have an HOA association, we have to include that in the debt service also.

John Harcar (17:19.223)
Got it. Okay, so let’s say the debt service was $700.

Janice Gilbreath (17:23.5)
A year. A year. Yeah. Yeah.

John Harcar (17:24.363)
Yeah, yeah. No, I’m yeah, yeah. Yeah. Okay. All right. So, you know, no, I’m just yeah, I’m just just because it’s folks on that might be kind of the same thing. Maybe don’t know all the particulars of it. So I just want to make sure that they really get the understanding of it. So why is this such a benefit to investors?

Janice Gilbreath (17:40.792)
The benefit is they do not have to provide all their tax returns. You know, I do tax returns. We do a lot over on the Gulf Coast from Gulf Shores to Rosemary Beach. There is a particular client that we have done their homes for years before we really got in the DSCR that their tax returns are 131 pages.

quite complicated, you know, on that. you know, so let’s take a refinance. Let’s say that your money is tied up and you would like to be able to refinance out of that home and cash out. Then, you know, you’re able to look at that, look at the appraisal, the 10.07, and then based on credit score and how long you’ve owned that house,

John Harcar (18:10.986)
Yes. Yes.

Janice Gilbreath (18:36.356)
We typically loan somewhere between 70 to 80 % of the cash out on that appraised value.

John Harcar (18:44.461)
Okay, okay, very cool.

What advice would you give to someone, if they’re out there researching properties, researching companies, researching, you know, other DSR loan programs, like what are a couple of specific pros and cons or things you want to look out for?

Janice Gilbreath (19:03.3)
Well, you know, John, one thing that I talked to several of my closing agents that have known me for many, years. I was trying to do a DSCR loan for a company that I was not that familiar with because it was under a hundred thousand. And I kept on asking the company, what are your fees? You know, all this, and they would not disclose them. So I talked to one of my attorneys.

And I said, do you ever get to the table with a DSCR closing and the closing costs are more than what the people thought? He said, it happens. So, you know, we are very transparent upfront. We disclose our fees, the attorney’s fees, and then we also do the escrow setups, which is your taxes and your insurance as part of the payment. So, you know, that’s.

very, very important. The other thing that I would recommend to people that I’m seeing happen is that particularly in rehab situations, they buy a house and they’re going to rehab it and then keep it as a rental. They borrow too much money upfront or they put too much money in it for rehab. And then when they come to me and say, hey, I’d like to do a refinance and get out of this

hard money loan or private money loan, whatever, they really owe too much money. And that’s something that we talk about. I’m a member of a lot of investor clubs and that’s something we talk about is have a good core of people that you can trust, that you can be able to sit down and talk to and they can advise you on, you know, certain properties and all that.

John Harcar (20:38.551)
Yeah.

John Harcar (20:59.479)
Mm-hmm.

Janice Gilbreath (21:02.69)
I think that is most important and particularly for people that are just getting into the investment field. Now, one thing about the DSCR, you don’t even have to own a personal house. You can do a DSCR loan and be a first-time investor and not a homeowner.

John Harcar (21:24.429)
Wow, okay, that’s great news for folks. Let’s say there’s somebody on this call that’s listening that wants to reach out to you about a DSCR loan or talk further about it. How or what is the best way for them to get in touch with you?

Janice Gilbreath (21:40.388)
I’m going give you my phone number. I’m in Huntsville, Alabama, but I land in 48 states, 256-509-4776, or my email is JaniceGilbreth at gmail.com.

John Harcar (21:59.006)
And I’ll put all that in the show notes guys. hope you got some incredible, you know notes from this Janice Thank you so much for sharing all that You know, I I truly enjoyed having you on here and you know, I hope you guys enjoyed this show as much as I did Janice thank you again, and we’ll see you guys on the next one. Cheers

Janice Gilbreath (22:17.486)
Thank you, John. It was great being with you today. Thank you.

John Harcar (22:21.149)
Awesome. Thank you.