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in San Joaquin, CA
San Joaquin sits in California's Central Valley, where investors chase both rental income and fix-and-flip opportunities. DSCR and hard money loans both skip traditional income verification, but they serve completely different investment strategies.
DSCR loans work for rental properties you plan to hold. Hard money works when you need fast cash to close a deal or fund renovations. Picking the wrong one costs you thousands in unnecessary fees or kills your deal timeline.
DSCR loans qualify you based on rent coverage, not your tax returns. If the property generates enough rent to cover the mortgage payment (usually 1.0-1.25x), you're approved. Terms run 30 years at investor rates, typically 1-3 points above conventional.
You can finance up to 80% LTV on purchases and rate-and-term refinances. Cash-out refinances usually cap at 75% LTV. Expect 15-25% down and rates that fluctuate with your credit score and reserve requirements.
These loans close in 20-30 days through standard underwriting. You'll need an appraisal that includes a rent schedule. Most lenders require 6-12 months of reserves per property, which adds up fast when you're scaling a portfolio.
Hard money loans fund based on property value, not income or rent potential. Lenders look at after-repair value (ARV) and loan 65-75% of that number. These are bridge loans, typically 6-24 months, designed to close deals fast or fund rehabs.
Rates run 8-12%+ with 2-5 points upfront. You're paying for speed and flexibility, not long-term affordability. Most hard money lenders can close in 5-10 days with minimal paperwork once they inspect the property.
Borrowers use these to acquire distressed properties, complete renovations, then refinance into DSCR or conventional loans. San Joaquin's older housing stock makes this strategy common for investors targeting value-add deals.
DSCR loans cost less but take longer. Hard money costs more but closes lightning-fast. DSCR requires the property to generate rent; hard money only cares about equity and exit strategy.
DSCR works when you're buying turnkey rentals or stabilized properties. Hard money works when you're competing with cash buyers, need renovation capital, or found a deal that won't appraise in current condition. The interest rate gap between them runs 4-8 percentage points.
Exit strategies differ completely. DSCR loans are your end financing—you hold the property and collect rent for years. Hard money is temporary—you must refinance or sell within 6-24 months or face extension fees and balloon payments.
Choose DSCR when you're buying a rental property that's already generating income or will rent immediately after purchase. It's cheaper money for the long haul if you can wait 20-30 days to close and the property appraises with sufficient rent coverage.
Choose hard money when you need to close before another buyer does, you're buying a property that needs major work, or you're planning a flip. In San Joaquin's competitive pockets, hard money lets you act like a cash buyer while preserving your liquid capital for renovations.
Many investors use both in sequence. Hard money to acquire and renovate a distressed property, then refinance into a DSCR loan once it's rented and stabilized. This approach maximizes speed on the buy side and minimizes carry costs long-term.
No, DSCR loans require rental income to qualify. Use hard money for flips since it's based on property value and your exit plan, not ongoing rent.
DSCR loans have lower total costs. Hard money hits you with 2-5 points upfront plus higher rates, while DSCR runs standard investor closing costs.
Hard money lenders care more about the deal than your experience. DSCR lenders usually want to see some rental property ownership or reserves to offset inexperience.
Yes, that's the standard play. Acquire and renovate with hard money, then refinance into a DSCR loan once the property is rent-ready and stabilized.
DSCR requires a full appraisal with rent schedule. Hard money often uses broker price opinions or desktop appraisals focused on ARV, making approvals faster.