**Last updated:** May 2, 2024

 

## What is a Schedule Of Real Estate Owned?

 

A Schedule Of Real Estate Owned (SREO) is a document that real estate investors applying for a loan provide to lenders in order to communicate their current real estate holdings and real estate investing experience. We call this your "Track Record".

 

The SREO is typically a spreadsheet and we have provided you with OfferMarket Capital's Schedule Of Real Estate Owned template below.

 

## What information is included in a Schedule Of Real Estate Owned?

 

- Property Number
- Property Type
- Purchaser/Entity Name
- Street Address
- City State
- ZIP	
- Purchase Price
- Purchase Date	
- Renovation Budget
- Monthly Rent
- Occupancy Status
- Sale Price
- Sale Date
- Days Held

 

The *Sale Price*, *Sale Date* and *Days Held* are for properties that you have sold -- i.e. they were fix and flip or rental properties that you have since sold.

 

## Schedule Of Real Estate Owned Template

 

Here is OfferMarket Capital's [Schedule Of Real Estate Owned (SREO) template](https://docs.google.com/spreadsheets/d/e/2PACX-1vStfF-rbpUk1XQ5QtD0Te1MuUj2lH0kk7w2YbQKwqu0Xv_2wMSbp5S22CPKk_2V4T8ZMnlEwnUabWuZ/pubhtml?gid=1988909553&single=true).

 

## Schedule Of Real Estate Owned Excel Template

 

**To download the Schedule Of Real Estate Owned Excel template:**

 

1. Go to our [Schedule Of Real Estate Owned Template](https://docs.google.com/spreadsheets/d/1h03J85WTXxltIC7fqaLQ19hISiVPnW6LVkCq0aksAO0/edit?usp=sharing)
2. Click 'File' in the top left menu
3. Click 'Download' in the dropdown menu
4. Select 'Microsoft Excel (.xlsx)' from the list of options

 

## Schedule Of Real Estate Owned PDF Template

 

**To download the Schedule Of Real Estate Owned PDF template:**

 

1. Go to our [Schedule Of Real Estate Owned Template](https://docs.google.com/spreadsheets/d/1h03J85WTXxltIC7fqaLQ19hISiVPnW6LVkCq0aksAO0/edit?usp=sharing)
2. Click 'File' in the top left menu
3. Click 'Download' in the dropdown menu
4. Select 'PDF (.pdf)' from the list of options

 

## Related concepts

 

- [Collateral Desktop Analysis](https://www.offermarket.us/real-estate-glossary/collateral-desktop-analysis)
- [ISAOA/ATIMA](https://www.offermarket.us/real-estate-glossary/isaoa-atima)
- [Landlord Insurance](https://www.offermarket.us/real-estate-glossary/landlord-insurance)
- [USPAP](https://www.offermarket.us/real-estate-glossary/uspap)
- [DSCR Loan](https://www.offermarket.us/blog/dscr-loan)

SREO (Schedule Of Real Estate Owned) is a list of properties a borrower owns, submitted during the loan approval process for underwriting review.

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Schedule Of Real Estate Owned (SREO)

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## What are Bad Boy Carve Outs?

 

**Bad Boy Carve Outs** are provisions in [non-recourse](https://www.offermarket.us/real-estate-glossary/non-recourse) [DSCR loans](https://www.offermarket.us/blog/dscr-loan-program) that protect the lender in the event members of the borrowing entity conduct themselves in an illegal or fraudulent manner. Bad boy carveouts allow the lender to hold one or more individuals of the borrowing entity personally liable for repayment of the loan.

 

## Examples that trigger Bad Boy Carveouts

 

Bad Boy Carve Outs can be triggered by several different violations of loan covenants, so it is important to read your loan docs carefully and consult your real estate attorney.

 

Examples include:

 

- taking on subordinate (i.e. 2nd position) financing without express written consent from the 1st position lender
- forged or fraudulent tax returns, bank statements, financial statements, operating documents (i.e. rent roll)
- illegal business conduct at the subject property 

 

## Non-Recourse DSCR Loans

 

Non-Recourse [DSCR Loans](https://www.offermarket.us/dscr-loan) are cash-flow based loans where personal guarantee is not required.

 

## Bad Boy Guaranty

 

Bad Boy Guaranties or Bad Boy Guarantees are the same concept as Bad Boy Carveouts.

 

## Are Bad Boy Carevouts Required?

 

Removing bad boy carveouts from your loan is unlikely and may depend on several factors:

 

- **securitization program guidelines and requirements**: if the lender will be selling the loan to an investor that will be securitizing the loan as part of a mortgage-backed security, then it is unlikely you would be able to remove the bad boy carve out.
- **quality of collateral**: if the collateral (subject property) is of high quality, the lender may be willing to accept the removal of a bad boy carveout, knowing that they will have an easier time recouping their loan through [foreclosure](https://www.offermarket.us/real-estate-glossary/foreclosure) or [pledge of shares](https://www.offermarket.us/real-estate-glossary/pledge-of-shares). 
- **pledge of equity**: if the lender's [pledge of shares agreement](https://www.offermarket.us/real-estate-glossary/pledge-of-shares) is signed by the borrower, the lender may be willing to remove a bad boy carve out.
- **LTV capitalization**: if the loan to value is conservative (i.e. 65% instead of 80%), then the lender may be willing to remove the bad boy provision from the loan agreement because the property is worth considerably more than the loan, and liquidation through foreclosure or pledge of shares should adequately allow the lender to recoup their loan principal and any fees.

Bad Boy Carve Outs protect lenders in non-recourse DSCR loans if the borrower engages in illegal or fraudulent activities during the loan process.

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Bad Boy Carve Outs | OfferMarket Real Estate Glossary

Bad Boy Carve Outs

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## What does non-recourse mean?

 

**Non-recourse** refers to a type of loan agreement where the lender can only look to the collateral pledged as security for the loan in case of default, and not to the borrower personally, for recovery of the debt. This means that in the event of default, the lender cannot seek payment or recovery from the borrower's personal assets or income.

 

## Non-recourse loan interest rates

 

Non-recourse loans are typically priced at a higher interest rate than recourse loans in order to compensate the lender for accepting less security of principal. Lenders may also require a higher [DSCR](https://www.offermarket.us/dscr-loan) in order to qualify for a given loan-to-value or LTV.

 

## Are DSCR loans non-recourse?

 

Not all DSCR loans are non-recourse. In fact, most private lenders require or strongly prefer full recourse. Loan programs that are non-recourse commonly include a [pledge of shares agreement](https://www.offermarket.us/real-estate-glossary/pledge-of-shares) and [bad boy carve outs](https://www.offermarket.us/real-estate-glossary/bad-boy-carve-outs).

 

### 1 - 4 Unit DSCR Loans

 

Most [DSCR loan programs](https://www.offermarket.us/blog/dscr-loan-no-down-payment) for 1-4 units require full recourse. This means that at least one member of the borrowing entity, typically an LLC, serves as a personal guarantor for the life of the loan.

 

### Portfolio DSCR Loans

 

Portfolio DSCR loans of 2 or more 1-4 unit properties can be either full recourse or non-recourse. 

 

### Multifamily DSCR Loans

 

Likewise, multifamily DSCR loans for 5+ unit properties can be either full recourse or non-recourse.

 

Ultimately, whether a loan is recourse or non-recourse depends on the type of loan and the risk tolerance of the lender and borrower.

 

The terms of the loan agreement will determine whether a DSCR loan is recourse or non-recourse, and the decision will depend on various factors, including the creditworthiness of the borrower, the type of collateral pledged as security, and the lender's risk tolerance.

 

## What's the difference between recourse and non-recourse loans?

 

A recourse loan is a type of loan or financing agreement where the borrower is personally liable for repayment of the debt, and the lender has the right to seek repayment from the borrower's personal assets or income in the event of default. This means that [the lender](https://www.offermarket.us/blog/best-dscr-lenders) has a claim not only on the collateral pledged as security for the loan, but also on the borrower personally.

 

A non-recourse loan, on the other hand, is a type of loan where the borrower is not personally liable for repayment of the debt in the event of default. The lender's only remedy in the event of default is to foreclose on, or seize, the collateral pledged as security for the loan, and not to seek repayment from the borrower personally.

 

In general, non-recourse loans are considered to be less risky for the borrower, but they also typically come with stricter terms and higher interest rates to compensate the lender for the increased risk.

 

## Are fix and flip loans non-recourse?

 

While it depends on the lender, most fix and flip loans are recourse and therefore require a personal guarantor.

 

## Why do lenders require personal guarantee?

 

Lenders require a [personal guarantee](https://www.offermarket.us/blog/hard-money-lender#:~:text=Personal%20Guarantees.%20Private,hard%20money%20loan.) from borrowers as a way to secure their investment in case of default on a loan. A personal guarantee is a commitment from the borrower to repay the debt using their personal assets or income if the borrower's business is unable to repay the loan.

 

Lenders ask for personal guarantees because it provides them with added protection and security in the event that the borrower's business is unable to repay the loan. This helps the lender to recover their investment even if the borrower's business fails or goes bankrupt. Personal guarantees also give lenders a way to enforce repayment if the collateral pledged as security for the loan is not sufficient to cover the debt.

 

In general, lenders require personal guarantees when the borrower has a limited credit history or when the loan amount is large and the collateral is inadequate to secure the debt.

Non-recourse lending means there is no personal guarantee required, protecting your assets.

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Non-Recourse | OfferMarket Real Estate Glossary

Non-Recourse

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

How to check if a property is considered rural?

USDA Rural Development Property Eligibility

CFPB Rural or Underserved

Appraisal Report Marked Rural

DSCR Loan Rural

Population Eligibility

Why do private lenders not lend for rural properties?

**Last updated:** April 16, 2024

 

 

If you're looking to buy an investment property and you are not sure if it's designated as rural, you've come to the right place.

 

## How to check if a property is considered rural?

 

Here are the rural designation search tools that we use for DSCR Loan and Fix and Rent Loan requests on our [private lending platform](https://www.offermarket.us/loans?ref=blog-rural-designation-search-tools):

 

- [USDA Rural Development Property Eligibility](https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp)
- [CFPB Rural and Underserved Areas Checker](https://www.consumerfinance.gov/rural-or-underserved-tool/#rural-or-underserved)
- 'Neighborhood Characteristics' section of your appraisal report
- Population

 

## USDA Rural Development Property Eligibility

 

If your search result looks like this, the property is considered rural...

 

![USDA Rural Development Property Eligibility Rural](https://cms.offermarket.us/uploads/USDA_Rural_Development_Property_Eligibility_Rural_08f47f2c82.png)

 

If your search result looks like this, the property is not considered rural...

 

![USDA Rural Development Property Eligibility Not Rural](https://cms.offermarket.us/uploads/USDA_Rural_Development_Property_Eligibility_Not_Rural_31e455d545.png)

 

## CFPB Rural or Underserved

 

If your search result shows 'Yes' in the Rural or Underserved column, then it is considered rural...

 

![CFPB Rural or Underserved](https://cms.offermarket.us/uploads/CFPB_Rural_or_Underserved_b9e2fc5d30.png)

 

If your search result shows 'No' in the Rural or Underserved column, then it is non considered rural...

 

![CFPB Rural or Underserved - Not Rural](https://cms.offermarket.us/uploads/CFPB_Rural_or_Underserved_Not_Rural_454ea2516e.png)

 

## Appraisal Report Marked Rural

 

If the 'Neighborhood Characteristics' section of your appraisal report is marked rural, we cannot fund if it is a DSCR loan. If it is a fix and flip loan, then we may be able to provide an exception and fund with reduced leverage (lower loan amount). If you believe the appraiser incorrectly marked the appraisal report as 'Rural' when it should be marked as 'Suburban', contact your OfferMarket relationship manager to submit our appraisal appeal form.

 

![Appraisal Report Marked Rural](https://cms.offermarket.us/uploads/Appraisal_Report_Marked_Rural_a6f5d8bea3.png)

 

## DSCR Loan Rural

 

At OfferMarket Capital, we cannot provide DSCR loans for properties that are designated as rural on the appraisal report. If the USDA Rural Development Eligibility is rural but the CFPB rural or underserved is not rural, then we may be able to make an exception and fund your loan.

 

## Population Eligibility

 

We strongly prefer to fund transactions where the local population is 20,000+. If the population is under 10,000 then we will most likely not be able to fund your loan. We also want to make sure that the local population is not in a significant decline and trending below or already below 20,000.

 

![private lender minimum population.png](https://cms.offermarket.us/uploads/private_lender_minimum_population_55c4b83702.png)


 

## Why do private lenders not lend for rural properties?

 

Many private lenders do not provide loans for properties that are designated rural for the following reasons:

 

### Liquidation Risk

 

If the property goes into foreclosure, there is additional risk because there is a limited market of buyers in rural markets. This is as opposed to larger metro areas with denser populations and deeper pools of active buyers. The lender does not want to spend a long time with a non-performing loan and risk needing to sell below market value because there are limited buyers.

 

### Securitization Guidelines

 

Many private lenders sell their loans to fixed income investors through a process known as securitization. Securitization, in this context, is the process of grouping many loans together and selling portions as an investment security to various investors through investment banks or mortgage [REITs](https://www.offermarket.us/real-estate-glossary/reit). In order for individual loans to be eligible to be included in a securitization, the loan's underlying asset (in this case residential real property) and borrower need to meet specific guidelines. Most investment property securitizations have specific guidelines that disallow properties considered rural.

Want to know if a property qualifies as rural for a DSCR or Fix and Flip loan? This guide explains how to search for rural designations.

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Rural Designation for DSCR Loan

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