The listing says "cash only" — Florida's favorite euphemism. It rarely means the seller wants cash; it means the building flunks agency warrantability and the listing agent is tired of watching conventional loans die in week three.
Which makes "cash only" one of the most reliable mispricing signals in the state: a financing problem being sold as a property problem, at a property-problem discount.
DSCR and non-QM lending exist to arbitrage exactly this gap — financing buildings agency rules refuse to examine, at terms that price the actual defect. Here's the whole map: what triggers non-warrantability, what each trigger really means for an investor, the terms, and the exit-liquidity honesty the discount is paying you for.
The Triggers: Why Buildings Fail Agency Review
- Investor concentration. Owner-occupancy below agency thresholds — the most common and most benign trigger, since a building full of landlords is precisely what a rental investor is shopping for.
- Reserve and budget failures. Reserves under ~10% of the budget or a failing financial review — genuinely meaningful, because underfunded reserves are tomorrow's special assessments (and post-milestone-law Florida has made this the era's defining trigger — next guide over: milestone inspections).
- Active litigation. The two-species trigger: nuisance suits (slip-and-fall, collections) are financeable noise; construction-defect and structural litigation is the real thing — it points at the asset and at assessments to fix it.
- Single-entity concentration. One owner holding more than ~10% of units — a control and stability flag that also describes every bulk-buyout opportunity ever purchased.
- Commercial space beyond thresholds (~35%), incomplete projects or developer control, and short-term-rental operation shading toward the condotel category.
The unifying logic: agencies underwrite buildings as if every buyer were an owner-occupant seeking maximum stability. Investors aren't — which is why half these "defects" read differently from the investment side, and why a lender that underwrites the actual building beats a rulebook that refuses to.
The Terms: Pricing the Defect Instead of Refusing It
| Factor | Warrantable Condo DSCR | Non-Warrantable DSCR |
|---|---|---|
| Down payment | 20–25% | 25% standard, 30% for harder files |
| Max LTV | 75–80% | 70–75% |
| Pricing | Condo tiers | Add scaling with trigger severity |
| Lender universe | Broad | Meaningful subset — placement matters |
| Cash-out LTV | 70–75% | 65–70% |
| Structures | Full menu | Full menu at capable lenders |
The placement nuance that saves deals: lenders disagree about which triggers they'll hold. One shop shrugs at 80% investor concentration but won't touch litigation; another finances settled-litigation buildings but caps single-entity ownership hard.
The building's specific defect determines the lender list — which is the entire argument for shopping the file wholesale rather than serially applying and dying at retail counters.
The Worked File: The Investor-Ratio Discount
- The building: 1998 St. Petersburg mid-rise, structurally clean milestone file, funded reserves — but 71% investor-owned, comfortably non-warrantable on concentration alone
- The unit: 2/2 listed at $265,000 — comparable warrantable-building units trade at $295–305K; the "cash only" discount is ~12% for a defect that harms an investor not at all
- The loan: 25% down ($198,750 at 7.5% — a quarter-point add over warrantable condo pricing), P&I $1,390 + taxes $270 + HO-6 $75 + dues $410 = $2,145 PITIA
- The ratio: $2,350 market rent → DSCR 1.10 — clean approval in a building the agency rulebook can't see
- The thesis: a 12% entry discount and a quarter-point rate add for a trigger that's actually a feature — with the exit story (below) priced in from day one
The Exit Honesty: Your Buyer Inherits Your Financing Problem
The discount has a source, and it's the resale: your eventual buyer needs the same specialized financing you used — a thinner pool, longer marketing times, and pricing that keeps the non-warrantable haircut unless the building heals.
Three ways professionals manage it: buy the curable triggers (investor ratio drifts, litigation settles, reserves rebuild — a building bought non-warrantable and sold warrantable captures the haircut as profit); calendar the building's status (annual condo-doc reviews alongside your refinance triggers — a healed building is both a refinance and an exit event); and hold for cash flow that doesn't need the exit — the 1.10 above pays regardless of the resale market's mood.
What doesn't work: paying warrantable prices for non-warrantable buildings because the unit was pretty. The discount isn't optional; it's the compensation.
The Diligence File (Beyond the Standard Condo Review)
Everything in the condo framework plus the trigger-specific layer: for litigation, the actual complaint (title agents pull it) — defect suits name the problem and its price range; for reserves, the current study and funding schedule against the building's milestone obligations — the question isn't today's balance but whether the plan closes the gap without assessments; for concentration triggers, the trend (is the building drifting toward or away from warrantability?); and always, the rental market check — high-investor buildings mean your comps and your competition live down the hall, so the 1007 will be well-supplied and unsentimental.
Fifteen minutes with the condo docs converts the "cash only" mystery discount into a priced, named defect — which is the entire trade.
The Bottom Line
Non-warrantable is a rulebook verdict, not a property verdict — and the gap between those two things is where the discounts live.
Name the trigger, price it honestly (some are features, some are futures assessments, a few are genuine hazards), match the lender to the defect, and keep the exit story funded by the entry discount.
Florida's "cash only" listings aren't asking for cash; they're asking for a lender who reads.
Found a building the banks won't touch? Send the address and the condo docs — I'll name the trigger, tell you which lenders hold it, and price the file honestly against the discount. Free, no hard credit pull. Start here or call us at (800) 355-ALEX.
Frequently Asked Questions
What makes a Florida condo non-warrantable?
What are typical non-warrantable condo loan terms?
Is buying a non-warrantable condo a bad idea?
Does litigation always kill condo financing?
Can a building become warrantable again?
How is this different from a condotel?
About the Author — Alex Doce, NMLS #13817
Alex Doce is the Principal Mortgage Broker at The Doce Mortgage Group (NMLS #2638131) in Fort Lauderdale, a nationally ranked top-1% originator with 38+ years in Florida lending, 7,000+ closings, and 1,500+ five-star reviews. He has financed Florida investment property through every market cycle since 1987. More about Alex →