DSCR Loans, Portfolio Strategy, and the Biggest Mistakes Landlords Make | Tim Wehner, LendingOne & Former NARPM National President

The Philly Landlord Guy Podcast | Guest: Tim Wehner, Director of Partnerships, LendingOne

Today's guest spent nearly two decades on the operations side of property management — growing a company to 8,500 single-family and multifamily doors across four markets, serving eight years on the NARPM national board of directors, and serving as NARPM national president in 2023. He now sits on the lending side of the table at LendingOne, one of the country's leading private real estate lenders.

This episode covers what separates well-run landlords from struggling ones, when to hand your properties to a professional manager, how DSCR loans actually work and why they are a powerful tool for Philadelphia investors, and what portfolio strategy looks like in a high-rate, low-inventory market.

The Two Most Expensive Mistakes Small Landlords Make

1. Deferring Maintenance

The math on deferred maintenance is worse than most landlords think. It is not just the cost of the repair itself — it is the compounding effect of everything that follows.

A tenant who waits a year and a half for a leaking roof to be fixed does not renew. When they leave, they leave angry, and they often leave the property in worse condition than they would have otherwise. Now you have a unit that needs a full turn — paint, carpet, cleaning, possibly significant repairs — on top of the original deferred maintenance issue. The cost of that deferred $600 repair can easily become a $10,000 to $15,000 turnover problem.

The pattern is predictable: deferred maintenance leads to tenant resentment, which leads to non-renewal, which leads to a difficult vacancy and a costly turnover. Meanwhile the asset itself is depreciating. The roof leak that was ignored becomes water damage. The HVAC that was "still working" fails completely.

Fix it when it is small. The $600 repair today costs you far less than the $15,000 turn it becomes if you wait.

2. Not Increasing Rent to Market Rate

The other side of the same coin. Tim describes owning a rental property himself where the tenant has been in place since 2011 — a wonderful long-term tenant — and is now $300 per month below market rent. At $300 per month, that is $3,600 per year in missed income. Over five years, that is $18,000.

The hesitation is understandable. Nobody wants to disrupt a great tenant. But there is a rational way to handle it: small, consistent annual increases tied to market data. A 3% annual increase on a $1,300 unit is $39 per month — far less disruptive than a $200 correction after years of no increases.

When property managers take over self-managed portfolios, under-rented units are one of the most common findings. The story is always the same: "She's been there for years, she's wonderful, we didn't want to rock the boat." The professional approach is to increase consistently and modestly so you never have to make a large correction.

NARPM and Why It Matters for Philadelphia Landlords

NARPM — the National Association of Residential Property Managers — exists to elevate professional standards in property management and increasingly to advocate for landlord and property manager rights at the legislative level.

For Philadelphia landlords specifically, NARPM's advocacy work is directly relevant. The Safe Healthy Home Act, the ongoing lawsuit challenging how Philadelphia City Council conducted its legislative process, the constant stream of new ordinances affecting tenant screening, lease termination, and eviction — these are exactly the areas where a national organization with legal resources and legislative relationships can make a difference that individual landlords cannot.

NARPM recently passed a bill in the House with bipartisan support and has made significant headway in Florida legislative battles. The organization is explicitly building out its advocacy function because the legislative environment for landlords and property managers is changing rapidly — not just in Philadelphia but nationally.

If you use a NARPM-affiliated property manager, you are working with someone held to a professional standard that non-affiliated managers are not required to meet.

When Should a Small Landlord Hire a Property Manager?

There is no universal answer — it depends on your goals. But here is a practical framework:

If your goal is to stay at your current unit count and you enjoy managing: Self-management can work if you stay current on local law, regulations, and market conditions. The constantly changing legislative landscape in Philadelphia makes this harder than it used to be.

If you have a full-time job and more than three to five units: This is typically the breaking point. At five units with a full-time job, the operational demands start consuming time that should be going toward your primary income or your personal life. Professional management at this stage usually pays for itself in preserved time, reduced vacancy, and better tenant quality.

If your goal is to grow: This is the clearest case for professional management. If you are spending 90% of your time managing existing properties and only 10% looking for deals, you are behind everyone who has it flipped. Growth requires deal-finding time. Deal-finding time requires your operations to run without you.

Professional management eats into your NOI — typically 6-8% of collected rent in Philadelphia. But it can save significantly more in reduced vacancy, better tenant quality, proper compliance, and preserved time for acquisition.

What DSCR Loans Are and Why Philadelphia Investors Use Them

The Difference Between DTI and DSCR

Most people are familiar with conventional financing — what lenders call a debt-to-income (DTI) loan. The bank asks for W-2s, tax returns, a full picture of your personal finances, and then decides whether you personally can pay back the loan. Your personal credit gets hit. There are limits on how many properties a bank will finance this way.

A DSCR loan — debt service coverage ratio — works differently. Instead of asking whether you can pay back the loan, it asks whether the property can pay back the loan.

The formula is simple: monthly rent divided by monthly principal, interest, taxes, and insurance (PITI). If that ratio is 1.0 or above — meaning the rent covers the debt payment — the loan qualifies. At LendingOne, depending on experience, location, and credit score, they can lend down to a 1.0x ratio.

Example: A property renting for $1,500 per month with $1,499 in monthly PITI qualifies. The property covers the debt, so the loan gets made.

Why DSCR Loans Work for Philadelphia Investors

  • No income requirement. You could have $0 in W-2 income and still qualify, as long as the property covers the debt
  • No limit on number of properties. As long as each property covers its debt, you can keep borrowing
  • No personal credit reporting. The loan is on the business entity, not on you personally
  • Speed. DSCR loans can close in 7 to 14 days — compared to the months-long process of conventional financing
  • Less documentation. Credit check, real estate schedule, and basic property information — not the surgical-level document collection that conventional lending requires
  • Rehab financing available. LendingOne finances up to 100% of rehab costs and up to 92.5% of total loan-to-cost
  • Property management fees not counted against you. DSCR underwriting uses rent vs. PITI only — property management fees are not subtracted from the ratio

DSCR for Cash-Out Refinancing

If you own Philadelphia properties free and clear or with significant equity, DSCR loans are a strong tool for recapitalizing — pulling equity out to deploy into new acquisitions without going through conventional refinancing.

You do not need to take it to maximum LTV. A conservative cash-out at 35% to 50% LTV still generates usable capital while keeping the monthly cashflow positive and maintaining reserves.

One critical rule: Never cash-out refinance to a point where the property no longer cashflows. If the monthly payment exceeds the rent, you are paying out of pocket every month. A DSCR loan will not allow this — the ratio requirement prevents it by design.

Portfolio Loans

For landlords with multiple properties, DSCR lenders like LendingOne also offer portfolio loans — combining multiple properties into a single loan with one payment. This can simplify your financial structure and allow you to pull equity from strong-performing properties while bundling in weaker ones.

Portfolio Strategy for Philadelphia Investors in 2026

The current market is difficult. Interest rates are high. Deals on the MLS are rarely worth buying at current prices. The BRRRR model that worked in 2020 and 2021 — buy cheap, renovate, rent for $2,000 — does not pencil in Philadelphia. There is no neighborhood in this city where you can buy a cheap row home, put $50,000 to $60,000 into it, and rent it for $2,000. The numbers do not work.

What does work in 2026:

Expand your geography. If you have only looked at one or two Philadelphia zip codes, look further. Northeast Philadelphia, the suburban collar counties, Wilmington Delaware — markets within a reasonable distance that you have not fully explored may have better entry prices and comparable rent-to-price ratios.

Get creative with financing. Owner financing, interest-only DSCR products, portfolio loans — there are structures available that can make deals work at current rates that would not work with a conventional 30-year product.

Stay ready to move fast. The investors who win in a constrained market are the ones who have their financing lined up, their team in place, and can close quickly when a deal appears. Have a hard money lender, a DSCR lender, and a local bank relationship active at all times.

Maintain reserves. Every property will eventually need a new roof, a new HVAC system, a major repair. The landlords who get into trouble are the ones who have no reserves when an unexpected expense hits. At that point the tenant stops getting maintained, starts complaining to L&I, stops paying rent, and the landlord has no money to fix anything or cover the mortgage. It is a spiral that starts with no reserves.

Be flexible on strategy. If you are a buy-and-hold investor and a strong flip opportunity comes by, look at it. If you are a flipper and a buy-and-hold deal makes more sense than a sale, consider it. The market rewards flexibility right now.

Does Having a Property Manager Help You Get a DSCR Loan?

Directly, not significantly — DSCR underwriting is about the asset, not the management structure. However:

  • Borrowers referred through LendingOne's property management partners receive a discount on fees
  • Property management fees are not counted against you in the DSCR ratio calculation — rent vs. PITI only
  • Lenders who know the property is professionally managed have more confidence in the rent income projections and property condition

Resources Mentioned

Need Help Managing Your Philadelphia Rental or Finding Your Next Investment?

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