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in Hawaiian Gardens, CA
Hawaiian Gardens investors often ask whether DSCR or hard money makes more sense for their next rental property. The answer depends on whether you're buying a cash-flowing rental or a fixer that needs fast funding.
DSCR loans qualify you based on rental income, not W-2s or tax returns. Hard money approves based on the property's current or after-repair value, not your finances at all.
DSCR loans work when the property already generates rental income. Lenders divide monthly rent by your mortgage payment to get a ratio, typically requiring 1.0 or higher to approve you.
You get 30-year fixed or adjustable terms at rates comparable to conventional loans. Most lenders want 20-25% down and credit scores above 620, but your job and tax returns don't matter.
These loans close in 3-4 weeks on average. You can finance single-family homes, small multifamily properties, or even a small portfolio of rentals under one loan.
Hard money loans fund based on property value, not borrower financials. Lenders advance 65-75% of purchase price or after-repair value, whichever calculation protects them more.
Expect 9-14% rates with 2-4 points upfront. Terms run 6-24 months because these are bridge loans, not permanent financing.
You can close in 5-10 days if the deal pencils out. Credit scores matter less than equity in the deal and your exit strategy to repay the loan.
DSCR loans cost less and last longer, but the property must already produce rent. Hard money costs more but funds properties that need work or can't qualify for traditional financing yet.
DSCR requires the rental income to cover the mortgage payment from day one. Hard money doesn't care about current income because the lender knows you'll sell or refinance within a year.
DSCR works for buy-and-hold investors building rental portfolios. Hard money serves flippers, developers, and bridge situations where speed beats cost.
Choose DSCR if you're buying a turnkey rental in Hawaiian Gardens that already has a tenant or can rent immediately. The lower rates and 30-year term make the numbers work for long-term holds.
Choose hard money if you're buying a distressed property, need to close in under two weeks, or plan to renovate and flip within 12 months. The higher cost makes sense when you need speed or the property can't qualify elsewhere.
Some investors use hard money to acquire and renovate, then refinance into a DSCR loan once the property is rent-ready. That strategy gets you the speed upfront and the savings long-term.
Not until it's rent-ready. DSCR requires current or projected rental income, which means the property must be habitable and marketable to tenants.
Most glance at credit but won't decline you over a 580 score if the deal has enough equity. They care more about your exit plan than your payment history.
Hard money closes in 5-10 days. DSCR takes 3-4 weeks because lenders order appraisals and verify rental income through leases or market rent surveys.
Yes, that's a common strategy. Complete the rehab, place a tenant, then refinance into a DSCR loan to lower your rate and extend the term.
Most lenders want rent to equal 100-125% of your mortgage payment. A 1.25 DSCR means $2,500 rent covers a $2,000 monthly loan payment.