DSCR Loans for Industrial Properties: Warehouses and Distribution Centers

Introduction: Industrial Investing Made Easier with DSCR Loans

Industrial real estate—especially warehouses and distribution centers—is one of the fastest-growing sectors in the investment landscape. With rising demand for logistics, e-commerce fulfillment, and last-mile delivery hubs, industrial properties offer strong long-term leases, stable tenants, and reliable cash flow.

But traditional financing for industrial assets can be complex, requiring full tax returns, business documentation, and rigid underwriting criteria.

DSCR loans for industrial properties provide a powerful alternative, allowing investors to qualify based on property income alone, not their personal financials. If you’re ready to scale your portfolio into the industrial space, DSCR loans can help you get there—faster and with more flexibility.

What Is a DSCR Loan for Industrial Real Estate?

A DSCR (Debt Service Coverage Ratio) loan is a type of mortgage that qualifies borrowers based on the property’s net operating income (NOI) rather than personal income, W2s, or tax returns.

It’s ideal for:

• Self-employed or LLC-based investors
  
• Warehouses and logistics centers
  
• Flex-space and light manufacturing
  
• Long-term NNN or gross lease tenants
  

✅ Most DSCR lenders want a DSCR of 1.20–1.30+, with strong tenant history or lease projections.

DSCR Formula for Industrial Properties

DSCR = Net Operating Income (NOI) ÷ Annual Debt Service

• NOI = Gross Rent – Operating Expenses
  
• Debt Service = Annual principal + interest
  

Example:

• NOI: $180,000/year
  
• Annual Debt Service: $144,000
  
• DSCR = 1.25
  

This means the property generates 25% more income than is required to service the debt—a solid sign of financial health for lenders.

Why Use DSCR Loans for Industrial Property Investments?

✅ No Personal Income Docs

No W2s, no tax returns, no DTI ratios. Approval is based on the income of the asset, not the borrower.

✅ LLC-Friendly

DSCR loans allow you to close in an LLC or corporate entity, helping investors scale and protect assets.

✅ Scalable and Fast

These loans typically close in 3–5 weeks, without the red tape of traditional banks or SBA loans.

✅ Stable Cash Flow from Long-Term Leases

Industrial properties often have multi-year NNN leases, making them ideal for DSCR underwriting based on consistent income.

Eligible Industrial Property Types

• Distribution centers
  
• Warehouses (cold storage, cross-dock, fulfillment centers)
  
• Flex industrial units
  
• Light manufacturing facilities
  
• Last-mile delivery hubs
  
• Storage and logistics facilities
  

💡 Properties must be income-producing or under contract with long-term tenants.

Typical DSCR Loan Terms for Industrial Properties

Real-World Example: Financing a Distribution Center with a DSCR Loan

Investor: Andre, mid-sized industrial investor in the Midwest
Property: 52,000 sq ft fulfillment center in Columbus, OH
Tenant: E-commerce third-party logistics (3PL) company
Annual Lease Income: $210,000
Operating Expenses: $30,000 → NOI = $180,000
Annual Debt Service: $150,000
DSCR = 1.20

Result:

• Closed in LLC with 30% down
  
• DSCR takeout loan approved in 32 days
  
• No W2s or tax returns required
  
• Planning to use equity for next warehouse acquisition
  

Top Markets for DSCR-Financed Industrial Properties

Industrial DSCR loans work best in metro areas with:

• High logistics demand
  
• Proximity to highways, airports, or ports
  
• Low vacancy rates
  

Top U.S. markets include:

• Dallas–Fort Worth, TX
  
• Chicago, IL
  
• Atlanta, GA
  
• Columbus, OH
  
• Phoenix, AZ
  
• Riverside–San Bernardino, CA
  
• Indianapolis, IN
  
• Charlotte, NC
  

Best Lenders for Industrial DSCR Loans

Not all DSCR lenders work with industrial assets. Look for:

• CoreVest
  
• Lima One Capital
  
• AVANA Capital
  
• Velocity Mortgage Capital
  
• Angel Oak Commercial
  
• BridgeInvest
  
• Private DSCR brokers specializing in commercial/industrial
  

🔍 Tip: Ask if the lender accepts NNN leases, vacancy projections, or signed LOIs in underwriting.

Tips to Get Approved for an Industrial DSCR Loan

• Provide a rent roll and detailed lease agreements
  
• Submit trailing 12-month income and expense statement
  
• Show stabilized tenancy or signed letters of intent
  
• Keep credit score above 680
  
• Have 6–12 months of reserves
  
• Present a clean title report and Phase 1 environmental (if needed)
  

DSCR vs SBA or Bank Loans for Industrial Assets

✅ Choose DSCR if the property is for investment and income-producing.
🚫 Choose SBA if you plan to operate a business from the property.

Final Thoughts: Scale Industrial with DSCR Simplicity

Warehouses and logistics hubs aren’t just for institutional players anymore. With DSCR loans, small to mid-sized investors can now finance industrial assets without submitting a single tax return.

Whether you’re acquiring a stabilized distribution center or refinancing an existing industrial property, DSCR financing offers speed, simplicity, and scalability—with income-driven approval and LLC-friendly terms.

Invest in the backbone of the economy with a lending solution built for investors, not employees.