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in Claremont, CA
Claremont's mix of historic properties and established rental markets attracts diverse investors. Both DSCR and hard money loans skip personal income verification, but they serve completely different strategies.
DSCR loans work for buy-and-hold investors who want 30-year terms. Hard money funds quick flips and rehabs where speed matters more than rate. Your timeline and property condition determine which loan makes sense.
DSCR loans qualify you based on rental income divided by monthly debt. If that ratio hits 1.0 or higher, you're eligible regardless of your tax returns. Rates run 1-2% above conventional, with 15-30 year terms available.
These loans work for stabilized rentals that already generate income or will immediately after purchase. You need 20-25% down and the property must appraise as rent-ready. Credit requirements sit around 640-680 depending on the lender.
Hard money loans fund based on the property's after-repair value, not current condition. You get money in days, not weeks. Terms run 6-24 months with rates between 9-14% plus 2-4 points upfront.
These loans cover distressed properties that won't qualify for traditional financing. Lenders focus on your exit strategy and experience level. Expect to put down 20-30% and show a clear plan to repay through sale or refinance.
The rate gap is massive. DSCR loans cost 7-8% today while hard money runs 10-14%. But hard money closes in a week when you need to grab a foreclosure auction deal. DSCR takes 3-4 weeks and requires a functioning property.
DSCR expects positive cash flow from day one. Hard money assumes the property needs work and won't generate income during your hold. If you're buying a turnkey Claremont rental near the colleges, use DSCR. If you're renovating a 1920s bungalow to flip, hard money is your only option.
Choose DSCR if you're buying a rental that's already leased or market-ready. The lower rate and long term let you hold through market cycles. Most Claremont multifamily and single-family rentals near transit or colleges fit this profile.
Pick hard money when the property needs significant repairs or you're flipping within 12 months. That run-down craftsman near downtown? Hard money gets you in fast. Plan your renovation timeline carefully because that short term and high rate will hurt if your project drags.
Yes, this is the standard exit strategy. Once the property is rent-ready and generating income, you refinance into a DSCR loan at a lower rate with a longer term.
Hard money has looser credit requirements but focuses heavily on your experience and exit plan. DSCR has stricter credit minimums but cares more about the rental income math.
Yes, neither requires you to live in California. DSCR focuses on the property's cash flow and hard money on the asset value, not your residency.
DSCR loans typically require 20-25% down. Hard money lenders usually ask for 20-30% depending on the property condition and your experience level.
DSCR works well for student rentals that generate consistent income. Hard money makes sense if you're converting a house into higher-density student housing and need renovation funds.