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in Shafter, CA
Shafter investors have two powerful financing options for rental properties and fix-and-flip projects. DSCR loans and hard money loans serve different purposes in your real estate strategy.
Understanding which loan fits your investment timeline and property type helps you move quickly in Kern County's market. Both skip traditional income verification but differ significantly in cost, terms, and ideal use cases.
DSCR loans qualify you based on rental income, not your personal earnings. Lenders calculate the debt service coverage ratio by dividing the property's monthly rental income by the monthly mortgage payment.
These loans offer 30-year terms with competitive rates for long-term rentals. You can finance single-family homes, multi-unit properties, and short-term rentals throughout Shafter and Kern County.
Rates vary by borrower profile and market conditions. Most lenders require a DSCR of 1.0 or higher, meaning the rent covers the mortgage payment. Down payments typically start at 20-25%.
Hard money loans focus on the property's after-repair value rather than your income or credit. These short-term loans help investors acquire and renovate properties quickly in Shafter's competitive market.
Funding happens in days, not weeks. Lenders care most about the deal itself and your exit strategy. Terms typically run 6-24 months with interest-only payments during the renovation period.
Rates vary by borrower profile and market conditions but run higher than traditional financing. You'll pay for speed and flexibility. Down payments range from 10-30% depending on the project scope and your experience level.
Timeline separates these options most clearly. DSCR loans close in 2-4 weeks and last 30 years. Hard money closes in 3-7 days but requires repayment within 6-24 months.
Cost structure differs dramatically. DSCR loans offer lower rates similar to conventional mortgages. Hard money charges higher rates plus points upfront, reflecting the short-term nature and quick access.
Property condition matters more with DSCR. These lenders want rent-ready properties with verified income. Hard money lenders fund distressed properties that need significant repairs before generating rental income.
Choose DSCR loans when you're buying turnkey rentals or properties needing minor cosmetic updates. This option works for building a long-term portfolio of cash-flowing properties in Shafter.
Pick hard money for fix-and-flip projects or properties requiring major renovations. The speed lets you compete with cash buyers, and the short term fits your plan to sell or refinance quickly.
Many Shafter investors use both strategically. Start with hard money to acquire and renovate a property, then refinance into a DSCR loan to hold it as a long-term rental. This combination maximizes your investment flexibility.
DSCR loans require properties that generate current rental income. You'll need a signed lease or rental history. For properties needing major work, start with hard money then refinance.
DSCR loans typically require 660+ credit scores. Hard money lenders care less about credit, often approving scores in the 500s since they focus on the property value and deal structure.
DSCR loans need 20-25% down plus closing costs. Hard money varies from 10-30% down depending on your experience and the project. Both may require reserves for repairs or payments.
Yes, this is a common strategy. Complete your renovations, secure a tenant, then refinance into a DSCR loan. This transitions you from short-term to long-term financing smoothly.
DSCR loans cost less for long-term holds due to lower rates. Hard money costs more but only for months, not years. Your total cost depends on how long you keep the property.