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in Commerce, CA
Commerce investors face a choice between DSCR loans and hard money loans. Both skip personal income verification, but they serve different strategies.
DSCR loans work for stabilized rentals with steady cash flow. Hard money loans fund quick acquisitions and heavy rehabs where speed trumps cost.
Your property condition and timeline determine which loan makes sense. A move-in ready fourplex needs different financing than a distressed industrial conversion.
DSCR loans qualify you based on rental income, not your tax returns. Lenders want a debt service coverage ratio of 1.0 or higher, meaning rent covers the mortgage payment.
You get 30-year fixed terms with rates typically 1.5-2.5% above conventional loans. Most Commerce investors use these for small multifamily or single-family rentals already generating income.
Expect 20-25% down, a 620+ credit score, and 6-12 months of reserves. Closing takes 25-35 days, similar to traditional loans but without income documentation hassles.
Hard money loans fund deals in 7-14 days based purely on property value. Lenders care about the asset and your exit strategy, not your income or credit score.
Terms run 6-24 months with rates from 9-14% plus 2-4 points upfront. Commerce fix-and-flip investors use these when they need fast capital or the property won't qualify for traditional financing.
Down payments range from 10-30% depending on experience and deal structure. No income verification, no appraisal wait times, and approval happens in days instead of weeks.
DSCR loans cost less but take longer and need tenant-ready properties. Hard money costs more but funds distressed deals conventional lenders won't touch.
A DSCR loan on a Commerce duplex might run 7.5% over 30 years. The same property with hard money costs 11% for 12 months plus 3 points upfront.
DSCR lenders want appraisals, title work, and rent rolls. Hard money lenders skip most of that and focus on after-repair value and your track record.
Exit strategies differ completely. DSCR loans expect long-term holds with refinance options. Hard money demands a clear exit within 24 months through sale or permanent financing.
Choose DSCR loans for turnkey Commerce rentals you plan to hold. A stabilized triplex near Commerce Casino qualifies easily if rents cover 100% of the mortgage payment.
Pick hard money when you're racing to close, fixing major issues, or buying properties that don't cash flow yet. That vacant industrial building on East Washington Boulevard needs hard money, not a DSCR loan.
Many Commerce investors use both strategically. Hard money funds the purchase and rehab, then they refinance into a DSCR loan once tenants move in and cash flow stabilizes.
Your experience level matters too. First-time investors often prefer DSCR's lower rates and longer terms. Seasoned flippers accept hard money's cost because they profit from speed and volume.
No. DSCR loans require tenant-ready properties generating rental income now. Use hard money for properties needing significant repairs.
DSCR loans cost less overall with standard fees. Hard money adds 2-4 points upfront, which can mean $8,000-$16,000 on a $400,000 loan.
Yes, but with limits. DSCR loans typically cap at four units. Hard money funds commercial deals more flexibly based on asset value.
Absolutely. This is the standard strategy for Commerce fix-and-rent investors. Rehab with hard money, then refinance to DSCR once tenants are in place.
Hard money wins here. Most hard money lenders ignore credit scores entirely and focus on property value and your exit plan.
DSCR loans take 25-35 days. Hard money closes in 7-14 days, sometimes faster if you have a strong relationship with the lender.