The investor: A software engineer at a major tech company in Austin, TX. W-2 income: $195,000. Employer: publicly traded tech company with a disclosed-investment policy requiring employees to report certain outside income activities to compliance. He determined that passive real estate (DSCR-financed, property-managed) qualified as permitted activity under the policy, but he preferred to minimize employer visibility into his investment portfolio regardless.
Credit score: 751. Investment goal: 5 properties, 3 states, all DSCR, zero income documentation.
Property 1: Jacksonville, FL — The Entry (Year 1)
Market selection: Jacksonville was his first choice for reasons he articulated clearly: NAS Jacksonville’s military renter base provides stable, predictable demand; Duval County property taxes run approximately 1.2–1.4% effective (much lower than Texas’s 2.2%+); price-to-rent ratios in the Mandarin/Southside corridor produced the best standard DSCR he could find in any Florida market at sub-$350,000 prices.
Property: 3BR/2BA SFR in Mandarin, FL. Purchase: $295,000. Current tenant: military family, signed lease at $2,150/month with 14 months remaining. Appraiser market rent: $2,250/month. Qualifying rent: $2,150/month.
At 80% LTV ($236,000 loan): P&I $1,661/month. Duval County taxes (1.3% effective): $320/month. Insurance: $148/month. PITIA: $2,129/month.
DSCR: $2,150 ÷ $2,129 = 1.01. Standard. Barely.
His W-2 was not requested. His employer compliance concerns were completely irrelevant to the process. Close: 21 days, remote.
Property 2: Charlotte Metro, NC — Cabarrus County (Month 7)
Market selection: He discovered the Cabarrus County DSCR advantage — 0.92% effective property tax rate versus Mecklenburg County’s 0.95%+ and Texas’s 2.2%+. On a $320,000 property, Cabarrus saves approximately $380/month in PITIA versus comparable Texas pricing. That 380/month is 15–19 DSCR basis points.
Property: 3BR/2BA SFR in Concord (Cabarrus County), NC. Purchase: $318,000. Vacant at purchase. Appraiser market rent: $2,200/month.
At 80% LTV ($254,400 loan): P&I $1,791/month. Cabarrus taxes (0.92%): $244/month. Insurance: $97/month. PITIA: $2,132/month.
DSCR: $2,200 ÷ $2,132 = 1.03. Standard.
Leased within 15 days of close at $2,250/month through a Concord property management company. Post-close DSCR on actual lease: 1.06. W-2 never submitted. Close: 23 days.
Property 3: San Antonio, TX — Military Corridor (Year 2)
Market selection: Having avoided Austin’s compressed DSCR markets, he looked at San Antonio — same state, same lender licensing, but fundamentally different economics. The Fort Sam Houston / Randolph AFB corridor produces 1.15–1.35 DSCR on properties at $210,000–$300,000 where military BAH supports rents and federal employment creates predictable tenant demand.
Property: 3BR/2BA SFR in Converse (Bexar County — note: Bexar County taxes run 2.3–2.5%, higher than Travis County’s 2.0–2.2%, but the lower purchase price compensates). Purchase: $228,000. Military tenant in place at $1,750/month, 10 months remaining. Appraiser market rent: $1,820/month. Qualifying rent: $1,750/month.
At 80% LTV ($182,400 loan): P&I $1,284/month. Bexar taxes (2.35%): $447/month. Insurance: $108/month. PITIA: $1,839/month.
DSCR: $1,750 ÷ $1,839 = 0.95. Below 1.00.
He negotiated to $215,000. At 80% LTV ($172,000 loan): P&I $1,211/month. Taxes: $421/month. Insurance: $102/month. PITIA: $1,734/month. DSCR: $1,750 ÷ $1,734 = 1.01. Standard.
Military tenant renewed at $1,850/month at lease expiration. Post-renewal DSCR: $1,850 ÷ $1,734 = 1.07. No income docs. Close: 22 days.
Property 4: Tampa Bay (Riverview, FL) — Year 2
Market selection: He returned to Florida for his 4th acquisition — specifically the Riverview corridor he had analyzed at the start, where DSCR was achievable with careful price selection.
Property: 3BR/2BA SFR in Riverview. Purchase: $368,000 (at the higher end of his budget, but the year-build was 2019 — lower maintenance expectations). Appraiser market rent: $2,500/month.
At 80% LTV ($294,400 loan): P&I $2,073/month. Hillsborough taxes (1.35%): $414/month. Insurance (Florida actual quote): $189/month. PITIA: $2,676/month.
DSCR: $2,500 ÷ $2,676 = 0.93. No-ratio. Florida insurance and Hillsborough taxes combined pushed this below 1.00 even on a $368K purchase.
He ran the analysis at multiple price points:
– $345,000: PITIA $2,530. DSCR: 0.99. Still no-ratio.
– $330,000: PITIA $2,435. DSCR: $2,500 ÷ $2,435 = 1.03. Standard.
Negotiated to $332,000. PITIA at 80% LTV: $2,450. DSCR: $2,500 ÷ $2,450 = 1.02. Standard.
Property leased in 17 days at $2,550/month. Post-lease DSCR: 1.04. Close: 24 days.
Property 5: Memphis, TN — Bartlett (Year 3)
Market selection: His 5th acquisition was a deliberate diversification into a different return profile — Memphis’s higher absolute DSCR (1.15–1.30 in Bartlett) with FedEx-anchored tenant demand. Lower purchase prices, higher cash flow ratios, different appreciation thesis.
Property: 3BR/2BA SFR in Bartlett (Shelby County), TN. Purchase: $245,000. FedEx operations employee, signed lease at $1,800/month. Appraiser market rent: $1,875/month. Qualifying rent: $1,800/month.
At 80% LTV ($196,000 loan): P&I $1,380/month. Shelby County taxes (1.5% effective): $306/month. Insurance: $94/month. PITIA: $1,780/month.
DSCR: $1,800 ÷ $1,780 = 1.01. Standard. Barely.
He confirmed the actual Shelby County appraisal district rate on the specific parcel — 1.48% effective on this address. Revised taxes: $302/month. PITIA: $1,776. DSCR: $1,800 ÷ $1,776 = 1.01. Standard. Close: 20 days. Memphis property management engaged pre-close.
The Complete Portfolio — 3 Years, 5 Properties
| # | Location | Purchase | Rent | PITIA | DSCR | Down+Costs |
|---|---|---|---|---|---|---|
| 1 | Jacksonville FL | $295K | $2,150 | $2,129 | 1.01 | ~$75K |
| 2 | Concord NC | $318K | $2,200 | $2,132 | 1.03 | ~$80K |
| 3 | Converse TX | $215K | $1,750 | $1,734 | 1.01 | ~$55K |
| 4 | Riverview FL | $332K | $2,500 | $2,450 | 1.02 | ~$85K |
| 5 | Bartlett TN | $245K | $1,800 | $1,776 | 1.01 | ~$63K |
| Total | $1.405M | $10,400 | $10,221 | 1.02 | ~$358K |
Net cash flow before management: $179/month. After management (10%): −$861/month — negative cash flow.
He is not surprised. Every deal was at DSCR of 1.01–1.04 — these were borderline-standard acquisitions with very thin cash flow margins. Management costs and occasional vacancy produce negative cash flow.
His actual return drivers: equity build ($4,100/month in principal paydown), depreciation (~$51,000 annual deduction), and appreciation on $1.4M in real estate.
His 3-year total return:
Cash flow: −$31,000 (negative, after management)
Equity build: $147,600
Portfolio appreciation (5.8% average across markets): $243,200
Tax benefit (depreciation): ~$60,000
Gross 3-year return: ~$420,000 on ~$358,000 deployed. Before refinancing or sale.
W-2 income submitted across all 5 transactions: zero. Employer contacted across all 5 transactions: zero. Tax returns submitted across all 5 transactions: zero.
Borrower details composite and anonymized. Not a commitment to lend. Mbanc NMLS #38232 | Equal Housing Opportunity Lender
W-2 Engineer DSCR Portfolio: Why Personal Income Never Appeared in the Files
This case study’s central lesson: the W-2 engineer’s salary was entirely irrelevant to building a DSCR investment portfolio. Three properties acquired over 18 months. Zero personal income documentation submitted to any file.
The investor profile:
Aerospace engineer, NASA contractor. Salary: $185,000/year. 401k: $480,000. Brokerage: $220,000. Credit score: 742. Lives in Houston TX.
Why DSCR, not conventional investment loans?
The engineer had four existing mortgage obligations: his personal primary residence, a prior investment property (conventional), and was planning multiple acquisitions. Conventional investment property financing:
– 10-property limit (would reach it fast)
– Each new investment property PITIA is counted in personal DTI
– Extensive documentation: tax returns, W-2, employment verification for every file
– Underwriting time: 45–60 days typical
DSCR: no DTI accumulation, no property count limit, no personal income documentation, 21–28 day close.
The acquisitions:
Property 1 — Murfreesboro TN SFR ($310,000):
Rutherford County 0.76% taxes. Market rent (appraiser): $2,050/month. 80% LTV ($248K). PITIA: $2,133. DSCR: 0.96 → 70% LTV ($217K). PITIA: $1,898. DSCR: 1.08. Standard. Personal income docs submitted: zero.
Property 2 — Concord NC SFR ($295,000):
Cabarrus County 0.92% taxes. Market rent: $2,000/month. 80% LTV ($236K). PITIA: $2,087. DSCR: 0.96 → tried 70% LTV but rent found at $2,100 from better comparable: DSCR at 80% LTV: 1.01. Standard. Personal income: zero.
Property 3 — Murfreesboro TN SFR ($285,000, 6 months later):
Same market, tighter pricing, stronger rent ($2,100). 80% LTV ($228K): PITIA $2,067. DSCR: 1.02. Standard. Personal income: zero.
Total portfolio growth in 18 months: 3 DSCR properties, $890,000 in assets, approximately $6,150/month in gross rental income, approximately $700/month positive cash flow after all PITIA across 3 properties.
Personal income documentation submitted across all three DSCR files: none. The W-2 was irrelevant to portfolio building.
Not a commitment to lend. Mbanc NMLS #38232 | Equal Housing Opportunity Lender
Mbanc NMLS #38232 | Equal Housing Opportunity Lender