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in Williams, CA
Williams investors typically choose between DSCR loans for stable rental income and hard money for quick acquisitions. Both skip W-2 verification, but the timeline and cost structure differ dramatically.
DSCR loans work when the property already generates rent or will after light cosmetics. Hard money fits flips, major rehabs, or time-sensitive purchases where speed beats cost.
DSCR loans qualify you based on the property's rental income divided by the mortgage payment. Lenders want a ratio of 1.0 or higher, meaning rent covers the PITIA payment.
You'll pay conventional-style rates, typically 7-9% depending on credit and down payment. Most lenders require 20-25% down and accept credit scores as low as 620.
These loans close in 3-4 weeks with property appraisal, title work, and rent documentation. They carry 30-year terms, making them ideal for long-term rental holds in Williams.
Hard money lenders fund based on after-repair value, not current condition or your income. They'll lend 65-75% of ARV, which often covers purchase and rehab costs combined.
Expect rates of 9-14% with 2-4 points upfront. Terms run 6-24 months, structured as interest-only payments during the renovation period.
These loans close in 7-10 days with minimal paperwork. Lenders care about your exit strategy and project experience more than credit scores or tax returns.
DSCR loans cost less per month but take longer to close. Hard money costs significantly more but funds in days, not weeks.
DSCR requires the property to already cash flow or be rent-ready. Hard money works for properties that need substantial work before they can generate income.
Exit strategies differ completely. DSCR borrowers hold for years and refinance when rates drop. Hard money borrowers flip or refinance into conventional loans within 12-18 months.
Choose DSCR when you're buying a rental that's already leased or needs only cosmetic updates. The lower rate matters when you're holding for years.
Pick hard money when the deal requires speed, the property needs major work, or you plan to flip within 12 months. Pay more upfront to avoid losing the property to another buyer.
Many Williams investors use both strategically. They acquire with hard money, complete renovations, then refinance into a DSCR loan once rent rolls stabilize.
Only if it's rent-ready after minor cosmetics. Major rehabs require hard money first, then refinance to DSCR once it's leased.
DSCR lenders want 620 minimum. Hard money lenders focus on deal quality and may accept scores in the 500s if the project makes sense.
DSCR loans go up to 80% LTV on the purchase price. Hard money lends 65-75% of after-repair value, which often exceeds purchase price.
DSCR loans cost less per month with rates around 7-9%. Hard money runs 9-14% but you're only paying interest, not principal.
Technically yes, but the high rate and short term make it expensive. Most investors refinance to DSCR within 12 months to cut costs.